1August 2012

Volume 23 No. 08 August 2012

reported. Aggregate exports for the January-May period grew by 8.4% to USD 22.4B from the USD 20.7B registered in the same period last year.

Manufactured goods accounted for 85.8% of the total export receipts; total agro-based products, 6.7%; mineral products, 4.2%; and petroleum products, 0.4%.

The country's biggest export market for the month was Japan, accounting for 23% of the country's total exports, followed by the United States, 14.5%; Thailand 11.5%; China, 11.4%; and Hong Kong, 7%.

The Philippine Economic Zone Authority (PEZA) approved P104.7-B investments in the first six months of the year, or 16.2% higher compared with the P90.1B worth of projects registered in the same period last year.

“With our robust investment landscapes, we are still keeping our 12-% investment growth target for the year,” PEZA Director General Lilia B. De Lima said.

PEZA Promotion & Press Relations Group Manager Elmer H. San Pascual said the agency is on track of meeting its P300-B full-year target as more big-ticket projects are expected to register this second semester.

Pascual said the projects approved in the first semester only represented about 45% of PEZA’s investment leads for 2012.

“We are looking at another 55% of the investment leads that we expect to be realized this year, and included there are bigger projects,” he said.

PEZA approved some 250 new projects in the first half of the year, 40% to 50% of which belonged to the electronics sector.

Once fully operational, these new projects are expected to generate USD 908M in export revenues.

Meanwhile, the country’s merchandise exports hit a 17-month high in May, growing to USD 4.9B or 19.7% higher than the USD 4.1B recorded in the same period last year.

Month-on-month, it increased by 6.4% from USD 4.6B in April, the National Statistics Office (NSO)

PHL exports hit 17-month high in May PEZA okays P104.7-B

investments in H1

DTI formulates 5-year “Taiwan Roadmap”The Department of Trade and Industry (DTI) is crafting a five-year “Taiwan Roadmap” to attract electronics companies to relocate here.

DTI Undersecretary for Trade and Investment Promotions Group (TIPG) Cristino L. Panlilio said the

roadmap should highlight the Philippines’ competitiveness as a manufacturing location.

“We should be able to capture other electronics firms in Taiwan because of the rising cost in China,” said Panlilio.

Panlilio noted that Wistron, which used to manufacture

most of its electronics products in Subic, has substantially reduced its operations as it relocated the bulk of its production in China because of competitiveness issues and the supply chain problem in the Philippines.

He said cost in China has gone up substantially and some manufacturers

Philippine Business Report2

INDUSTRYTReNDS

PHL to become auto exports hub by 2022 Motor vehicle production in the country is expected to hit 285,000 units by 2016 and up to 534,000 units by 2022 as outlined in the proposed Philippine Auto Industry “Vision 2022,” a sectoral industry roadmap prepared by the private sector upon the initiative of the Department of Trade and Industry (DTI).

The roadmap also sees tripling the industry’s current 170,000-unit production output while exports of auto parts reaching USD 7B from USD 3.8B as the country’s economy improves and develops into a competitive manufacturing base of motor vehicles, parts, and components.

Under the automotive roadmap, the Philippines shall be transformed as a global hub for automotive-related human resource development and process outsourcing within the 10-year timeframe.

Based on the projections, sales of locally assembled completely knocked down (CKD) units may hit 195,000 units, completely built up (CBU) exports of 90,000 units, and auto parts exports of USD 4.8B by 2016.

The outline expected local production to hit 534,000 units of which local CKD sales would be 350,000 units. Exports are forecast

to double to 184,000 units and auto parts exports increasing to USD 7B.

To support these targets, the roadmap has called for P41-B additional investments over the 10-year period or by 2022. The current industry investments have been estimated at P100B.

Auto industry’s growth factors

nRising per incomenAccelerated infrastructure

developmentnLatent domestic market/ageing vehicle fleetnIncreasing trend toward

environmentally-friendly/ green vehiclesnThe economic integration of the

Association of Southeast Asian Nations (ASEAN) region

nHarmonization of standards and technical regulationsnRelocation of parts and

components manufacturers from developed economies

e-trikes may give rise to P20-B industryThe electric-tricycles (e-trikes) project of the Asian Development Bank (ADB) and the Department of Energy (DOE) will generate a P20-B business in the country, industry players said (see related story on p.5).

The Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP) and the Electric Vehicle Association of the Philippines (EVAP) said the industry can provide value-added parts and labor for the project.

The ADB and DOE have started the search for manufacturers for the rollout of 100,000 e-trikes until 2016.

The projects aims to reduce the transport sector’s reliance on fossil fuels and enhance the standard of living of tricycle drivers.

Foreign firms need to invest at least USD 8M to put up electric vehicle (EV) manufacturing operations in the country.

The 100,000 e-trike units valued at about USD 5,000 each will result in a P21.5-B business in the country.

However, parts and components like motors, controllers, lithium ion batteries, steering systems, and suspension systems still have to be imported.

All 100,000 units will be rolled out to local government units (LGUs) starting this year.

The project also targets reducing the transport sector’s gasoline consumption by 561,000 barrels per year, resulting in the reduction of 260,000 metric tons (MT) carbon dioxide emissions per year.

Recharging stations will be put up in strategic locations like airports and tourist destinations.

Cocopeat seen next export winnerThe country is becoming a top supplier of cocopeat worldwide, the Philippine Center for Postharvest Development and Mechanization (PhilMech) said.

Cocopeat, a by-product of coconut husk, is popular worldwide primarily as a growing medium for crops using hydroponics.

PhilMech said the Philippines has enough coconut trees to exceed India and Sri Lanka, currently the top exporters of cocopeat, even if both nations have less lands devoted to coconut compared to the country.

The Philippines has 3.3M ha of coconut land compared to India with only 1M ha and Sri Lanka with coconut plantation area only the size of Bicol region.

“It is part of PhilMech’s mandate to conduct research so we can put to good use the many types of wastes that farms produce, and if only 30% of discarded coconut

like Taiwanese businesses are looking elsewhere. The Philippines is deemed gaining back its competitiveness as a manufacturing hub.

The Taiwanese, he said, could put up another economic zone although it has already an existing ecozone in Subic.

“Subic is always prepared to accommodate them,” he said.

3August 2012

husks are processed into high-grade cocopeat, the Philippines could be the largest supplier of the commodity internationally,” PhilMech Executive Director Rex L. Bingabing said.

PhilMech believes that the potential for the Philippines to become the world’s top cocopeat exporter cannot be ignored, especially now that cocopeat is gaining wider acceptance as a growing medium for hydroponics.

Cocopeat has a water retention capacity of up to eight times its weight and needs less watering compared to peat moss, another popular growing medium. The product is resistant to bacterial, weed, and fungal growth and can be used up to four years.

More firms seen relocating from China to PHLThe Export–Import Bank of Korea (Korea Eximbank) sees an influx of Korean companies relocating their operations from China to emerging market economies led by the Philippines.

Korea Eximbank Chief Representative of the Manila Office Tae-ik Park said China-based Korean companies are looking at the Philippines as a relocation site on the back of the country’s strong macroeconomic fundamentals and rising costs in the mainland.

Park said the Korean firms, mostly engaged in manufacturing, are now finding their operations in China getting expensive and are thus looking at cheaper alternative investment sites.

“The Philippines has a high population and abundant natural resources that attract Korean firms,” he said.

In preparation for the entry of Korean firms into the Philippines, the Korea Eximbank has decided to put up a representative office in the Philippines that was recently approved by the Bangko Sentral ng Pilipinas (BSP).

“More Korean companies will come to the Philippines. That is why we decided it was time to open a representative office here,” Park said.

The bank is engaged in providing cheap financial assistance to private firms.

Gov’t to develop rubber industryThe government is looking to develop the country’s rubber industry to take advantage of an expected increase in tire production of its major market.

Department of Trade and Industry (DTI) Undersecretary for Regional Operations and Development Group (RODG) Merly M. Cruz said the DTI is looking to promote the rubber industry as Yokohama Tire Philippines, Inc., the country’s major market for its rubber, is expected to raise its tire production by 2017.

Cruz said Yokohama Tire currently produces 21,000 tires per day and is seen expanding to 50,000 tires per day by 2017.

Yokohama Tire’s higher output, she said, would be a very good opportunity for the local rubber industry.

“We are eyeing to increase Philippine rubber share [in Yokohama Tire’s requirement] to 50% by 2017,” she said.

Yokohama Tire, a subsidiary of the Yokohama Rubber Co. Ltd. of Japan, is located at the Clark Freeport Zone and has more than 1,600 regular employees. About 96% of its production are exported.

Cruz said areas planted to rubber in the country may have to be

increased by 40% in the next three to four years to achieve higher rubber output.

Data from the Bureau of Agricultural Statistics (BAS) showed that as of the first quarter, the country’s rubber production reached 66,710 metric tons (MT).

Apart from expanding rubber plantations, the DTI is looking at other activities to support the industry and improve the industry players’ capacity to produce better product quality.

She said the DTI is organizing the first-ever Philippine Rubber Investments and Market Encounter (PRIME), an event aimed at providing access to market and investment opportunities for the rubber industry, in September in Clark, Pampanga.

PHL packaging industry gears up for growthThe country’s packaging industry players are calling for a new roadmap for export packaging.

The Central Philippine University (CPU) Packaging Center said the roadmap should be designed in a way that the country could take advantage of the upswing in Asian economies, which is projected to grow 6.9% this year and 7.3% in 2013.

Businesses must prepare, opportunities must be identified, and market trends should be tracked, said CPU.

CPU has been spearheading the development of packaging in the Philippines and recently established the Packaging Center for Packaging Engineering and Technology – a combination of the Philippines’ first specialized School of Packaging Engineering (SPE) and a United Nations-compliant Packaging Testing Lab (PTL).

CPU said packaging exports have been growing steadily since 2009, reaching P163.2M last year.

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TRaDe aNDINVeSTMeNTS

The government is emphasing on the importance of proper packaging for products manufactured by small- and medium-scale enterprises (SMEs) to give local entrepreneurs a fighting chance in international markets.

IT-BPO industry to double by 2016The information technology-business process outsourcing (IT-BPO) industry is expected to more than double in both revenues and direct employment in the next five years, the Business Processing Association of the Philippines (BPA/P) said.

The Philippines is the world leader in voice-based services and is overtaking India, the leader in non-voice services, in that broad service area as well.

Based on a study commissioned by BPA/P for the IT-BPO Road Map 2011-2016, the BPO industry has the potential to grow from a USD 11-B industry in 2011 to a USD 25-B billion industry by 2016, providing well-paying jobs to 1.3M Filipinos.

“To achieve this target, the industry must address the looming shortfall of hundreds of thousands of people between now and 2016,” said BPA/P President and Chief Executive Benedict Hernandez.

In 2011, the industry directly employed 638,000 people providing voice, back-office, creative, IT and software development, health information management, and other services to companies around the world from BPO hubs in the Philippines.

Demand for talent remains high and is steadily increasing, such that the industry’s growth now largely depends on how many employable graduates can be produced, BPA/P said.

To address the talent hurdle, BPA/P has undertaken a series of ambitious initiatives in cooperation with key government agencies and the private

sector to attract potential hires and improve near-hire skills sets so applicants become employable.

“We like to say that these opportunities allow people to ‘work abroad’ but ‘live here’ in the Philippines,” Hernandez said.

AGRICULTURE/AGRIBUSINESS AND FISHERY

First Pacific plans agri projectsFirst Pacific Company Ltd. is planning to venture into banana and sugar plantations in the Philippines and is seeking foreign partners with distribution networks in the target markets.

First Pacific Managing Director Manuel V. Pangilinan said subsidiary IndoAgri is already the third biggest crude palm oil (CPO) company in the world, but their interests are not just limited to CPO.

“We are bullish on demand for rubber going forward for the same reason we are bullish on copper as emerging markets get wealthier. In the Philippines, we are looking at sugar and bananas, though not at the scale of IndoAgri,” Pangilinan said.

He said the planned banana plantation business will take off before the investment in the sugar venture.

BOI approves 2 agri projectsThe Board of Investments (BOI) has approved two agribusiness projects with combined cost of P102M.

These are the P91-M meat processing plant of majority-owned Filipino SN SMN Meat Products Corporation and the P10.9-M coco peat plant of Mati Peat Top Corp.

Department of Trade and Industry (DTI) Undersecretary for Industry Development and Trade Policy Group (IDTPG) Adrian S. Cristobal Jr. said the meat product facility to be located in Pampanga will have an annual capacity of 1,980 metric tons (MT).

The company, said Cristobal, who is also BOI Managing Head, will export 50% of its production to neighboring markets like Hong Kong, Malaysia, and Singapore.

Meanwhile, the wholly-owned Korean Mati Peat Top Corp.’s coco peat plant project will be set up in Mati, Davao Oriental.

It will have an annual production of 9,762MT of coco peat which will then be exported to Korea and Japan.

Tarlac hosts corn seed processing plantChemical firm Du Pont Far East, Inc.-Philippines has expanded its agricultural presence in the country with its P1-B investment in a corn seed processing plant in Luisita, Tarlac that would benefit 4,000 corn-growing farmers.

Du Pont Country Managing Director Ramon S. Abadilla said the Tarlac investment would cover 7,000 has of corn seed production.

The state-of-the-art corn seed processing plant started operations in March this year.

So far, Du Pont is concentrating on the production of conventional hybrid corn and other high-yielding bio seeds, which now account for 40% of its total corn production.

5August 2012

Abadilla said farmers now resort to higher yielding corn seeds to improve their income.

NaBCOR, Calata sign joint venture for corn supplyAgriculture firm Calata Corp. said it has entered into a memorandum of agreement (MOA) with the National Agribusiness Corp. (NABCOR) for the exclusive supply of corn inputs for processing in the company’s nationwide Corn Post-Harvest Processing and Trading Program.

NABCOR President Honesto F. Baniqued said Calata will not only supply corn but other agricultural products as well, including fertilizers. NABCOR is a government-owned and controlled corporation under the Department of Agriculture (DA).

“The contract is still under the process of refinement and development. Calata will supply NABCOR and the finished product will go back to them. It’s an equity-to-equity sharing,” Baniqued said.

NABCOR and its joint venture partner will do experiment processing in NABCOR’s plant in Isabela, and will then proceed up north, he said.

ENERGY

Shell allots USD 1.2B for 2 big projectsShell Philippines is investing close to USD 1.2B for two big-ticket projects.

Shell Country Chairman Edgar O. Chua said the company is looking at liquefied natural gas (LNG) import and regasification terminal in Batangas.

Early last month, Shell signed a deal with the government for a joint technical feasibility study for an LNG terminal adjacent to Shell’s existing refinery.

Potential customers of the LNG facility are natural gas-fired power plants and even small firms that want to shift to LNG from the more expensive diesel, Chua said.

Furthermore, Shell is upgrading its refinery in Batangas to increase output in the future.

BOI approves P718-M Phoenix Pet investmentThe Board of Investments (BOI) has approved the P718-M investment of Phoenix Petroleum Philippines, Inc. (PPPI) for new storage terminals in Cagayan de Oro City and Bacolod City.

PPPI invested P525M for a new storage facility in Cagayan de Oro inside the Phividec Industrial Estate.

Some P193M, on the other hand, was invested in the Bacolod City storage terminal located at the Bredco Port.

GREEN PROJECTS Greenergy reinforces Isabela biofuel investmentGreenergy Holdings, Inc. has approved advance cash injection of P50M on its biofuels investment with Isabela Alcogas Corporation.

This forms part of its subscription to the company’s P25-M shares, or an equivalent of 2.5B shares at a par value of P0.01 per share.

Greenergy also approved the subscription by Agrinurture, Inc. to the firm’s P25-M worth of shares.

DOe auctions 5,000 e-trikes for LuzonThe Department of Energy (DOE) will start the mass-scale rollout of electric tricycles (e-trikes) in major areas in Luzon with it scheduling a bidding this year for initial 5,000 fleets.

The deployment of e-trikes as an alternative public transport system in the country is seen ramped up to 20,000 units next year and will climb further to 80,000 in 2016.

The initial units under Package I, according to the bid notice issued by the DOE, will be deployed in the National Capital Region (NCR), Regions 3, 4-B, and 6.

Of the fleets, 2,000 e-trikes will be allotted for NCR; 1,000 units for Region 3; 1,500 units for Region 4-B; and 500 for Region 6.

HOSPITAL AND MEDICAL SERVICES PROJECTS

Chong Hua Hospital to rise in MandaueChong Hua Hospital will soon put up another general hospital in Mandaue City, Cebu.

The Mandaue City Council has adopted the resolution approved by the local health board which endorses the application of Chong Hua Hospital to put up another general hospital.

The said resolution states that the establishment of a hospital in the city is in line with the vision to become a premiere business destination in central Philippines in 2016.

It also states that the establishment of a Chong Hua Hospital in the city will provide quality health care to the city’s 346,693 population as it will also be beneficial to the residents living in the northern part of Cebu and the whole of Region 7.

INFRASTRUCTURE/PUBLIC- PRIVATE PARTNERSHIP PROJECTS

MaCea, aLI plan P1.5-B bus rapid transitMakati Commercial Estate Association (MACEA) and Ayala Land, Inc. (ALI) are planning a P1.5-B bus rapid transit (BRT) system for EDSA-Ayala-Buendia/Taft route to improve

Philippine Business Report6

RESEARCH & DEVELOPMENT BOI approves P5.1-M R&D projectThe Board of Investments (BOI) has approved the P5.1-M clinical research and development (R&D) project of Rainers Contract Research Services, Inc.

The company has put up a facility in San Juan City and started its commercial operations last May. The plant aims to determine the safety and effectiveness of medicines, devices, diagnostic products, and treatment regimen.

It will also offer other services such as designing and analysing random clinical trials or epidemiology; providing technical expertise in developing trial design, and sample size or biostatics; data management; clinical trial and observational study management; technical writing; and regulatory assistance.

Department of Trade and Industry (DTI) Undersecretary for Industry Development and Trade Policy Group (IDTPG) Adrian S. Cristobal Jr. said the investment would strengthen clinical research in the country and provide jobs for local scientists and medical workers.

Data show that clinical research and trial activities particularly in diabetes, psychiatry, oncology, and respiratory trials have been growing in the Philippines over the last five years.

STRATEGIC PROJECTS

DBP to assist transport and logistics sectorThe Development Bank of the Philippines (DBP) has stepped up its assistance to transport and logistics sector by approving 14 projects worth P1.4B.

The projects fall under the Connecting Rural and Urban

Intermodal Systems Efficiently (CRUISE) that will manage projects on roads, packaging, transport, distribution, and cold chain facilities.

DBP President and Chief Executive Officer (CEO) Francisco F. del Rosario Jr. said the government financial institution (GFI)is continuously coordinating with concerned government and private agencies and institutions in establishing inter-agency partnerships and in identifying investment opportunities in the transport sector and supply chain mainly in post-harvest technologies and facilities and logistics.

Aside from the 14 approved projects, there are also 31 under evaluation projects worth P2.6B and nine prospective accounts totalling to P705M.

aquino graces Berth Six inaugurationPresident Benigno S. Aquino III and International Container Terminal Services, Inc. (ICTSI) Chairman and President Enrique K. Razon led the inauguration of the USD 200-M Berth Six of the Manila International Container Terminal (MICT) recently.

The new berth is equipped with two post-Panamax twin lift quay cranes and 10 rubber-tired gantries.

“With the country attracting more foreign investments than ever, we have now added capacity to quickly and efficiently move cargo,” Razon said.

Despite ICTSI’s overseas expansion, he said they remain bullish on the Philippines and it will always be their priority.

aTI opens logistics and pre-delivery facilityThe Asian Terminals, Inc. (ATI) has recently opened a vehicle logistics and pre-delivery inspection facility for imported completely-built-units to serve the country’s fast-growing car import industry.

the traffic in Ayala Avenue and connect passengers to Metro Rail Transit-Light Rail Transit (MRT-LRT) railway systems.

MACEA President David L. Balangue said MACEA is expected to contribute P700M of the P1.5-B total cost and the rest would be borrowings.

The BRT, which would have four stops along Ayala Avenue, would have a dedicated lane. Under the plan, existing buses plying the EDSA-Ayala-Buendia/Taft route would no longer be allowed.

Also, passenger jeepneys along Ayala Avenue would have to be moved to the inside streets and integrated with the e-jeepney route.

MASS HOUSING

BOI records P2-B investment for mass housingThe Board of Investments (BOI) has recorded some P2B worth of investments for low-cost housing projects by six property developers last May.

The Investment Priorities Plan (IPP) 2012 included mass housing among priority sectors eligible for incentives.

BOI-listed mass housing projects

Firm Investments Location (inPmillion)AmaiaLand 951.31 NegrosCorp. Occ. Filinvest 891 CebuCityLandInc.* DMCIProject 755 ParañaqueDevelopersInc*.

PeterTheRock 172 BatangasPropertiesIncorporated ShelterSystems 89 BatangasDevelopmentCorp.* FadconRealtyand 40 CaviteDevelopmentCorporation

*Grantedtaxincentives

7August 2012

The 3 ha, world-class, and state-of-the-art vehicle logistics center (VLC) located at the Batangas Port is operated by global freight and contract logistics solutions provider Ceva Logistics Philippines, Inc. It has spacious staging areas for parking, and fully-automated delivery inspection portals.

“Through this facility, our clients can expect the same level of efficiency and commitment to quality customer service,” ATI Executive Vice President Andrew Hoad said.

AVIATON

PaL buys new aircraft The Philippine Airlines (PAL) has acquired its third Boeing 777-300ER aircraft of the six units it ordered until 2013.

The newest aircraft from Seattle, Washington flew to Cebu for its maiden flight. The flag carrier also plans to use the plane for flights to Vancouver in Canada, Japan, and Hong Kong.

The fourth aircraft is expected to be delivered this November while the last two in April and November next year.

PAL, under its new management, is set to undergo modernization program of its USD 500-M fleet.

Cebu Pacific secures new aircraft for long-haul operationsCebu Pacific has acquired new aircraft for its long-haul operations and to serve markets outside Asia Pacific.

The newly leased budget carrier A330s will start long-haul operations in the second half of 2013.

The company expects delivery of four Airbus A330s wide body jets until 2014.

BPO

11 BPO firms ready for expansionSome 11 business process outsourcing (BPO) firms are putting up new and expanding operations in the country for the next three years that can generate 20,000 jobs.

Department of Trade and Industry (DTI) Undersecretary for Trade and Investment Promotions Group (TIPG) Cristino L. Panlilio said multi-business missions will be coming this year on top of these BPO investments.

The investment missions will be coming from Qatar, Kuwait, Malaysia and electronic vehicle (EV) missions from Taiwan, Korea, and Japan. Delegations from Laos and Korea will also come for electronics missions.

DTI is also set to conduct two outbound missions this year. One major mission is going to Malaysia to tap the huge halal market which is needed to grow especially for the Middle East markets.

BPO firms setting up new or expanding operations

• Accenture • Lattice • AGofGermany • SPiGlobal• Bayer • Sutherland• Dupont • Teleperformance• IBM • UnitedHealth• Infosys • WellsFargo

aGC Networks sets up operations in PHLIndia’s leading solutions integrator, AGC Networks, is setting up operations in the Philippines to serve the needs of local business process outsourcing (BPO) firms.

The technology firm also aims to customize solutions for various sectors – from government to telecommunications,

manufacturing, banking and finance, retail, and small- and medium-scale enterprises.

“The Philippines is an important market where we are expecting a great deal of action. It’s among the select strategic and dynamic markets we hand-picked. It fits our solutions portfolio and shows the potential to deliver faster result,” AGC President Sanjeev Verma said.

MANUFACTURING

JeNTeD to set up factory in LagunaJapan Environment Technology Development Co., Ltd. (JENTED) with Japanese business group Tagaytay Mountain Peak Corp. (TMPC) - is eyeing to build a USD 200-M light emitting diode (LED) factory in Laguna by yearend that will supply both domestic and export markets.

The plant is expected to produce around 1M LED light bulbs annually. Aside from generating employment opportunities, the project could also put the country in the high technology map in the lighting industry.

GEM of Japan President Yoshiyuki Ikeda and JENTED Executive Director Kimihiko Kitahara said they are bullish on the prospects of the LED lighting business not only in the Philippines but also in other countries where they plan to export their products.

MINING

Intex promises responsible miningNorwegian-based mining firm Intex Resources ASA has prepared plans for responsible mining in Mindoro.

Intex has so far poured in USD 50M in developing the mine’s resources and reserves, bringing a definitive feasibility study to completion. The original target is to produce 53,000 tons (T) of nickel annually that would make Mindoro one of the largest nickel laterite projects in the world.

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Intex Chief Executive Officer (CEO) Jon Pettersen said the firm has developed a two-phase mine plan to deliver minimal environmental footprint and maximum benefit to the local community.

Monte Oro eyes higher stake in apex miningMonte Oro Resources & Energy Inc. (MORE) is looking to raise its existing 5-% stake in listed Apex Mining Co., Inc.

Apex holds a mineral production sharing agreement (MPSA) for a copper-gold deposit in Maco, Compostela Valley where the company mines an average of 700 tons of ore a day.

In November 2011, MORE acquired 73.34 primary Class A shares of Apex for USD 6M. The investment reflected the group’s confidence in Apex’s management team and commitment to develop its mineral resources under the MPSA tenements.

POWER

aboitiz unit inks USD 546-M Davao power plant dealAboitiz Power Corp. (APC), with its wholly-owned subsidiary Therma South, Inc., has entered into USD 546-M contracts with local and foreign contractors for the construction of its planned 300-megawatt (MW) coal-fired power plant in Davao.

APC said the contracts signed were for the construction, supply, and coordination concerns relating to the Davao coal facility, which will be put up in Barangay Binugao, Toril district, Davao City and in Barangay Inayawan, Sta. Cruz, Davao del Sur.

The company said it could now proceed with the Davao coal project as it had already been approved by the Davao City Council and had been granted an Environmental Compliance Certificate (ECC) by the Department of Environment and Natural Resources-Environmental Management Bureau (DENR-EMB).

APC also assured Davao residents that the 300-MW circulating fluidized-bed coal-fired power plant of the Aboitiz group would be equipped with state-of-the-art technology capable of meeting stringent health and environmental standards.

Toledo expansion gets capital infusionFirst Metro Investment Corporation (FMIC) will infuse additional capital of P1.6B for the capacity expansion of the 82-megawatt (MW) Toledo power plant to be undertaken by affiliate firm Global Business Power Corporation (GBPC).

The capital infusion is pursuant to a capital call by GBPC and represents the proportionate share based on FMIC’s current ownership of 49.11%. The company said up to P5B worth of fixed rate corporate bonds will be issued to raise part of the amount that it will need for its equity outlay in the coal plant project.

The firm previously revealed its proposed capacity expansion, primarily to supply the 60-MW requirement of Carmen Copper Corporation of Atlas Mines.

Under the agreement, Toledo Power will design, engineer, finance, and construct the proposed expanded capacity of 82MW. The bulk of the generated electricity will be contracted by Carmen Copper.

REAL ESTATE

aLI and partners launch P30-B upscale development at the FortAyala Land, Inc. (ALI) and its partners are investing P30B for the development of the upscale One Bonifacio High Street (BHS) mixed-use complex which will include the new headquarters of the Philippine Stock Exchange (PSE).

ALI President Antonino T. Aquino said One BHS will be developed and further supported with a pioneering mixed-use development

that will be the biggest investment in one area.

One BHS will seamlessly integrate a premium lifestyle center, a P9.9-B all-suite residential tower by Ayala Land Premier (The Suites) as well as Shangri-La Hotel that offers 5-star hotel amenities.

The P30B will be spent over a span of four years with half of it being invested by the Shangri-La group in a 500-room hotel and residential project.

The other half will comprise the residential, office, and retail components to be jointly developed by ALI, the Campos group’s Evergreen Holdings, and the Fort Bonifacio Development Corporation.

Century Properties to roll out P16-B new residential unitsCentury Properties Group, Inc. (CPG) will roll out P16B worth of new residential units this year, roughly the same level as the previous year.

Projects include a mid-rise building in Quezon City under unit Century Limitless, Inc. estimated to cost around P4.8B. It will make available a total of 2,000 affordable housing units on a 4.4- ha property along Commonwealth Avenue.

The company has already sold six out of the nine-building Azure residential project in Parañaque. Each tower houses 550 units.

Around 67% of total sales come from overseas markets like Asia, United Kingdom (UK), and the Middle East.

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RETAILING

Uniqlo to open 50 stores in 3 yearsTo jumpstart its expansion in Asia, Japan’s Fast Retailing Co. Ltd. plans to roll out 50 Uniqlo stores in the Philippines within three years.

The company considers the country as a strategic location for expansion activities in the Association of Southeast Asian Nations (ASEAN) region which is essential to its target of being the No. 1 fast fashion retailer in the world by 2020.

“We consider that the Philippines will open our market to other countries in Asia,” said Fast Retailing Philippines Chief Executive Officer (CEO) Katsumi Kubota.

The initial phase of expansion will be concentrated in Metro Manila and eventually to other cities. Fast Retailing Philippines launched its first Uniqlo store in the country at the SM Mall of Asia in Pasay City. The store occupies 1,550 sqm of floor space and offers apparel for men, women, and children.

TELECOM

PLDT brings Ciena’s coherent 100G technology to PHLThe Philippine Long Distance Telephone Company (PLDT) has partnered with US-based Ciena Corporation to deploy Ciena’s coherent 100 Gigabits per second (100G) technology and Optical Transport Network (OTN) switching solutions to increase PLDT’s capacity and service flexibility of its backbone Domestic Fiber Optic Network (DFON).

With this regional and long-haul domestic network upgrade, PLDT will become the first network operator in the Philippines to deploy 100G, which will allow the operator to extract more capacity out of existing fiber and support the delivery of high-bandwidth services and applications.

P4.6-B Rodriguez Water System operationalManila Water Company (MWC) has started operating the first phase of the P4.6-B Rodriguez Water System Project that includes a new water treatment plant and water distribution mainline.

As the largest water system project built and energized by MWC in its 15 years of operations, the plant will address the current and long-term demand for reliable surface water supply of the municipalities

of Rodriguez and San Mateo in the province of Rizal and some areas of Marikina City.

The plant has the capacity to treat up to 150M liters of water per day and will serve a population of over 940,000, bringing safe water to areas that have been previously dependent on deep wells.

RDC okays P219-M airport expansionThe Regional Development Council (RDC)-Western Visayas approved the P219-M budget for the Bacolod-Silay Airport expansion bound to start by the first quarter of 2013.

The project will include the expansion of the airport terminal at P194M and the 500-m runway extension at P25M.

MaJOR PROJeCTS

DOTC allots P93.8M for provincial seaportsThe Department of Transportation and Communications (DOTC) has allotted P93.8M to rehabilitate and expand several harbors in the country.

“These will also respond to the steady expansion of shipping activities—shipcalls, cargo throughputs, and passenger and container traffic—which made it a necessity to expand and upgrade the country’s port community,” DOTC Secretary Manuel Roxas II said.

Seaports Budget Purposeforrehabilitation (inmillion pesos)

Bacacay, Albay 9.6 Handle the expanding number of shipment of coal products coming from the island barangay

Corcuera, Romblon 28.7 Improve regular and special boat trips from Corcuera to Calatrava in Tablas Island, as well as to the provincial capital of Romblon, Banton Island, and San Agustin

Melga, Dinagat 4.9 Make the port one of Island main entry points from Surigao del Norte to Dinagat Island Palid, Zamboanga 4.9 Provide a connection to Buluan IslandSibugay

Pili, Albay 8.7 Expand docks to accommodate not only motorized banca plying Pili Bay, but also the expected increase in the fish and aquaculture production in the area

Placer, Surigao 28.4 Serve all seacrafts within Del Norte the municipality and from the neighboring islands and towns Sto. Domingo, Albay 8,6 Serve as a strategic location between Legazpi City and Tabaco City

Philippine Business Report10

Jollibee to open 300 new stores in PHL, overseasJollibee Food Corp. (JFC) plans to open 150 more outlets in the Philippines and another 150 in selected countries.

JFC recently opened 167 new stores in the country and 93 overseas.

aLI acquires Nestlé plant siteAyala Land, Inc. (ALI), through its subsidiary Avida Land, has acquired a 6.6-ha site of a former Nestlé coffee factory in Muntinlupa to further boost its expansion in the southern part of Metro Manila.

ALI said the property will add to its roster of developments in the area which include the 700-ha Ayala Alabang Village, the two-tower Avida Towers Alabang, and the newly expanded Alabang Town Center.

ALI has earmarked P8B for new land acquisitions this year. It aims to increase its presence further in various locations in the country.

Coca-Cola marks 100th year in PHLCoca-Cola Philippines celebrated a century of existence in the country recently with a number of activities, including the staging of the Coke ng Bayan concert and launching of the President of Happiness Project, and various corporate social responsibility (CSR) projects.

Coca-Cola operates in 200 countries and records a rate of 1.8B servings a day of its beverages, ready-to-drink coffees, and juice drinks.

2GO to expand business2GO Express, Inc. asked the Civil Aeronautics Board (CAB) to grant it authority to operate as a domestic airfreight forwarder.

In a June 20 notice issued by the board, 2G0’s application will be reviewed by the CAB on or before August 24.

2GO Express is a unit of 2GO Group, Inc., formerly ATS Consolidated, Inc.

PLDT, asian Hospital tie up for Telpad appsPhilippine Long Distance Telephone Co. (PLDT) said it has partnered with Asian Hospital and Medical Center to provide exclusive Telpad applications to hospital patients, doctors, and staff.

Telpad is a landline and fully interactive tablet, allowing users to make and receive unlimited local calls, and unlimited Internet access, and exclusive PLDT services.

The Telpad applications are useful to patients as they can access useful information, such as finding the right specialist for particular ailments. Doctors will likewise benefit from the new apps particularly those that will give them immediate access to patients’ medical records, making it possible for them to accurately monitor patients’ conditions.

COMPaNY NOTeS

BILaTeRaLaGReeMeNT

PHL, Taiwan move for a broader bilateral accordThe Philippines and Taiwan are discussing an Economic Cooperation Agreement (ECA) that would expand and elevate the two economies’ bilateral relations to a more comprehensive one.

This developed as Department of Trade and Industry (DTI) officials led by DTI Secretary Gregory L. Domingo and Undersecretaries Adrian S. Cristobal Jr. and Cristino L. Panlilio, together with Manila Economic and Cultural Office (MECO) Resident Representative in Taipei Ambassador Antonio I. Basilio and MECO Chairman Amadeo R. Perez, met with Taiwan Economic Affairs Vice-Minister Francis Kuo-Hsin Liang, who was the guest speaker of the Business Meeting with Taiwan Trade Mission.

Panlilio also said DTI is crafting a Taiwan Roadmap to capture more Taiwanese investors, especially in electronics.

A bilateral ECA could be comprehensive in nature that could give rise to a free trade agreement (FTA).

Taiwan authorities had been pushing for continued discussions for an FTA with the Philippines to capture Taiwanese investments into the country, protect existing workers in Taiwan, and create new employment opportunities from expanding Taiwanese firms.

PHL-US partnership to make financial services more accessible The United States (U.S.) and the Philippines have announced a new partnership that will provide Filipinos easier access to financial services through the use of mobile phones.

The two countries agreed to implement what is known as the Scaling Innovations in Mobile Money (SIMM) initiative in the Philippines.

“The SIMM project aims to empower Filipinos by providing easier and more efficient access to banking and payment services through mobile phones. It builds upon U.S. Agency for International Development (USAID)/Philippines’ current work in microfinance and mobile banking to expand opportunity and financial services through new technologies,” USAID Administrator Rajiv Shah said.

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The initiative will enable more Filipinos to enjoy access to financial services in a more affordable and efficient manner by expanding mobile money services. Key areas include the payment system, government services, and electronic payroll distribution.

strengthening the ability of countries to formulate evidence-based policy in this area.

8 PHL companies named top firms in SeaEight firms from the Philippines have been named among the top companies in Southeast Asia, results of the second annual poll conducted by Alpha Southeast Asia, an institutional investment magazine focused on Southeast Asia’s banking and capital markets, showed.

Top Companies in the Philippines

• SM Investments Corp. (SMIC)• Ayala Corp.• Megaworld• Banco de Oro Unibank (BDO)• Bank of Philippine Islands (BPI)• Globe Telecom• Philippine Long Distance Telephone

Co. (PLDT) • San Miguel Corp. (SMC)

The magazine said the awards are based on tallied votes among 460 investors, pension funds, hedge funds, equity, and fixed income brokers and analysts with investment interests in the region.

Companies in each country were ranked on their financial management, adherence to corporate governance, corporate social responsibility (CSR), and investor relations’ strategy, transparency and disclosure.

SM Investments Chief Financial Officer (CFO) Jose T. Sio was named as the Best CFO in the Philippines.

Gender equality to boost productivityGenerating ways for women to have access to jobs and economic opportunity may help increase worker productivity in the country and the rest of East Asian and Pacific countries by 18%, a World Bank (WB) report entitled “Toward Gender Equality in East Asia and the Pacific” showed.

The report stated that while gender equality across the region has improved tremendously, disparities still exist in many areas, specifically in the economy.

“In some ways, women in the region are better positioned today than ever before to participate in, contribute to, and benefit from development, but much more need to be done,” WB Lead Economist Andrew Mason said.

The report showed that the Philippines has gone a long way in enhancing women’s voice both in the home and society.

Filipino women have high levels of autonomy, as reflected in control of their own savings, and have the ability to make decisions on matters like health care and household purchases. More women are climbing up the corporate ladder and are either elected or appointed to public office.

The report contributes new data and evidence on gender and development, significantly

Food and Drinks asiaFood and Drinks Asia, an international exposition on specialty foods, delicatessen, confectionery, beverages, beers, wines and spirits,

will be held on September 6-9, 2012 at the World Trade Center Metro Manila in Pasay City.

Exhibitor profiles include confectionery products, cooking equipment, dairy products, dispensing machines, filtration and separation equipment, flavors and fragrances, food packaging equipment, hotel equipment, kitchen equipment, refrigeration equipment, water treatment equipment, weighing equipment, adhesive systems, bag making, bakery materials, and beverage processing equipment.

Food FranchisingFood Franchising, an exhibition on agro and marine industry, will provide a wide systematic platform for buyers and sellers to meet, interact, and do business on September 6-9, 2012 at the World Trade Center Metro Manila in Pasay City.

Supermarkets, hypermarkets, departmental stores, importers, wholesalers, distributors, manufacturers of food and drink, food service equipment and supplies, resorts and hotels, restaurants, cafes, bars and clubs, fast food outlets, hospitals, airports, flight catering services, testing and standards organizations, export promotion organizations, and repair and maintenance companies are invited to attend.

Philippine Business Report12

Entered as Third-Class Mail at theMakati Central Post Office

under Permit No. 504valid until 31 December 2012

Philippine Business ReportAugust 2012

Philippine Business Report is publishedmonthly by theTrade and Industry InformationCenter (TIIC),Department ofTrade and Industry, 2FTrade and IndustryBuilding, 361Sen.Gil J. PuyatAvenue,Makati City 1200, Philippines • Phone (+632) 895.3611 • Fax (+632) 895.6487 •To subscribe, e-Mail: publications@dti.gov.ph

Editorial Team: Anne L. Sevilla, Editor-in-Chief •Vic S. Soriano, Managing Editor • Cresenciano P. Par, Assistant Editor •Jam A. Hourani,Ariel B. Salcedo,Elaine M. Lazaro, andEmman R. Caleon, Writers •Ren C. Neneria, Design Layout •Myrna V. de los Reyes, Circulation.

economic Indicators

*GNI - Gross National Income

01234567

4Q (2010) 1Q (2011) 2Q (2011) 3Q (2011) 4Q (2011) 1Q (2012)

GNI Growth Rate (%)

01234567

4Q (2010)1Q (2011) 2Q (2011) 3Q (2011) 4Q (2011) 1Q (2012)

GDP Growth Rate (%)

127128129130131

Jun-12May-12Apr-12Mar-12Feb-12Jan-12

Consumer Price Index(2000 base year)

0100020003000400050006000

May-12Apr-12Mar-12Feb-12Jan-12Dec-11

exports (In USD Billion)

4,2004,4004,6004,8005,0005,2005,4005,600

May-12Apr-12Mar-12Feb-12Jan-12Dec-11

Imports (In USD Billion)

012345

Jun-12May-12Apr-12Mar-12Feb-12Jan-12

Inflation Rate (%)(1994 base year)

40.541

41.542

42.543

43.544

Aug-12Jul-12Jun-12May-12Apr-12Mar-12

Peso per US Dollar RateAsofAugust8,2012

3.43.63.8

44.24.44.6

Jul-12Jun-12May-12Apr-12Mar-12Feb-12

Interest Rate (%)