philippines usat page 1-6.qxd 3/6/11 20:00 página 1 our ... · and member of the late president...

A long-timeally of the U.S.,

the Philippines isembarking on an ag-

gressive growth strategyand warmly welcomes partner-

ships with the private sector

The May 2010 presi-dential election inthe Philippines her-alded a new govern-ment, representing

a new direction and a renewedsense of hope for this resilient na-tion of warm smiles and opti-mism.

Benigno Aquino III’s re-sounding victory was the firststrong sign of support for thecandidate who hails from a fam-ily of well-loved politicians thathave followed the line of ‘peo-ple power’ and opposed mar-tial law. His record-breakingmargin of over 5 million votesalso suggests that the country ison track for a period of politicalstability, a fact not gone unno-ticed by the international busi-ness community; the electionswere soon followed by a spike ininvestor confidence.

President Aquino is holdingtrue to his campaign platform of“no corruption, no poverty”.

“As the son of two people whodedicated their lives for democ-racy, I intend to use what I’velearned from my parents in lead-ing our country towardsprogress,” says PresidentAquino. “I am deter-mined to govern withtransparency and ac-countability, and toshow our peoplethat through sim-ple and practicalmeans, we can ef-fect change.”

His administra-tion is also tacklingthe Millennium De-velopment Goals(MDGs) head-on andthe President believesgreater transparency goeshand-in-hand with poverty al-leviation.

“Our battle cry during thecampaign was: ‘Kung walangcorrupt, walang mahirap.’ It sim-ply means that we’ll work to sig-nificantly reduce poverty andcorruption during my term,” heexplains.

The new administration hasalready taken immediate stepsto make the government moretransparent and the “Zero-BasedBudgeting” approach has beenimplemented to oblige all gov-ernment agencies to justify theirprojected expenses in order tolimit their spending to the ab-solute minimum.

Herminio Coloma Jr., Secre-tary of the Presidential Com-munications Operations Officeand member of the late PresidentCorazon Aquino administra-tion, reveals that PresidentAquino has put himself at the na-tion’s disposal, truly believing inthe presidency as an office fromwhich he can uphold the man-date of the Filipinos.

“Despite the tremendouspower his office holds, he

would like to project openness,approachability and be some-one people can relate to. Thepeople of the nation are likethe customers and the gov-ernment is here to serve,” heexplains.

Backed by positive GDPgrowth (2010 saw a 7.3% rise –the fastest pace since the mid-1970s – and forecasts for thecurrent year hover between 5-6%), President Aquino is por-traying a bolstered image of thePhilippines to the world, andthe world is watching and lis-tening. New investment lawsoffer better guarantees, yet arebalanced by the government’sfocus on sustainable develop-ment in all areas, especiallywhere natural resources areconcerned. This improvedbusiness climate is crucial inthe government’s plans to har-ness the power of the privatesector through partnerships toaddress needs that the statebudget cannot cover on its own.

“The country’s message over-

seas is that the Philippines isonce again open for business asa responsible and dynamicmember of the community ofnations,” says President Aquino.Mr. Coloma agrees: “It is a landof opportunity, wealth andcompetent and professionalpeople who can grow busi-nesses.”

The President’s economicplan for his six-year term re-volves around eight key areas,open as prime investment op-portunities: agro-industry, busi-ness process outsourcing(BPO) and information tech-nology (IT) services, electron-ics and semiconductors, energyand electricity, logistics, min-ing, shipbuilding, and tourism.

The agricultural sector, for-merly the country’s economicbackbone, has taken a smallerrole in the shadow of the grow-ing high-tech sectors as well asBPO and other services. Nev-ertheless, agriculture accountsfor 14% of GDP, and is receiv-

ing renewed attention in an ef-fort to increase food self-suffi-ciency and relieve poverty inthe archipelago’s rural areas.The state-owned LandBank, for example, is im-plementing the Depart-ment of Social Welfareand Development’sconditional cashtransfer (CCT) pro-gram, from whichsome 1 millionpeople currentlybenefit. In 2010,the governmentbudgeted over$231 million forthe CCT program,a figure that is ex-pected to morethan double by theend of this year.

The Philippines isrelying on public-pri-vate-partnerships in or-der to improve itsinfrastructure with a viewto become a regional logis-tics hub. Better roads, bridges,electricity networks, etc. willalso enable the tourism indus-

try to grow. In a tidy spiderweb of interconnections,

tourism is also expect-ed to grow thanks to

the country’s bur-geoning casinos andintegrated resorts,which in turn arepaying into thegovernment’s so-cial developmentprograms.

“We’ve stream-lined business regis-

tration, improvedpower supply, institut-

ed reforms and issuedpolicies to fight corruption,

and established closer coordi-nation between the nationaland local governments to improve the in-vestment climate,even in thecountryside.We now havea govern-ment that issincere and isdeterminedto pursue itscommitment tomove forward in broad daylight,where everything it doesand how it does things will beclear, honest and transparent,”says President Aquino.

Our World Insert is produced by United World. USA TODAY did not participate in its preparation and is not responsible for its content

SPECIAL THANKSUnited World woud like to extend a special thank youto Secretary Ricky Carandang and Ian Soqueno fromthe Presidential Communications Team, and toChairman Sergio Ortiz Luis, Gabby Cruz and RenatoOsmena of the Philippine Chamber of Commerce

This report is available at

www.unitedworld-usa.com

AA UUNNIITTEEDD WWOORRLLDDSSUUPPPPLLEEMMEENNTT PPRROODDUUCCEEDD IINN TTHHEE PPHHIILLIIPPPPIINNEESS BBYY::Charlotte Rose, Andrew

Machaj, William Skidmore,Paula Bellsola,

Ugo Bagration and Vincent Rifici

THE PHILIPPINESOpen for business

This supplement to USA TODAY was produced by United World Ltd.: Suite 179, 34 Buckingham Palace Road - London SW1W 0RH - Tel: 44 20 7409 3106 - [email protected] - www.unitedworld-usa.com

Our WorldWednesday, June 15, 2011

‘Pacquing’ a punchThe nation looks to Emmanuel“Manny” Pacquiao as a nationalhero, a sports god, and an in-spiration because he went fromnothing to becoming a con-gressman in the internationalarena and an ambassador forthe Philippines.

He has been named “oneof the most influential

people today in theworld,” and num-

ber one pound-f o r - p o u n dboxing cham-pion of thew o r l d .Nonetheless,

one of Mr. Pac-quiao’s main

goals at the end ofthe day is helping the

poor and his fellow Filipinosas congressman for theSarangani region in Mindanao.

Mr. Pacquiao is very pas-sionate about his work becauseof his own personal experiencewith poverty and aims to focuson development on a nationallevel despite just being con-gressman for the Sarangani re-gion.

“I entered politics because Iwant to help people,” he says. “Iknow what they are feeling andwhat they need our assistancewith because I have been in thatsituation during my lifetime.”

Mr. Pacquiao is focusing oncreating a provincial hospitaland provincial university forthe Sarangani population ofover half a million, with his vi-sion of teaching the people towork and how to benefit from

earning an income. “We edu-cate them on how to get themost from their talents, andhelp them learn the requiredskill sets for a particular job,” hesays. “I’m also starting a free ed-ucation program for childrenwhose families cannot affordto send them to school, becauseif not, who will help them?”

He is working alongside Pres-ident Aquino to improve anddevelop Sarangani, and so far,the President has been veryhelpful and is likely to supportall of Mr. Pacquiao’s projects.Also the vice-chairman of theHouse Committee onYouth and Sports,Mr. Pacquiaoplans to alignthe sports pro-gram to pro-mote not onlyboxing, but allsports to helpcultivate the Fil-ipino youth.

To give the youth theopportunities for education anda bright future, Mr. Pacquiaosuggests that the governmentsets aside funding for educa-tion and educational infra-structure like classrooms, sothat the children have morespace to learn. In addition tomore funding, Mr. Pacquiaohas suggested leveling up thequality of education in the coun-try by continuing teachers’ ed-ucation and assessment, so thateducators will need to keep re-freshing their qualifications.

As the congressman andboxer works with the govern-

ment to improve education, hehas also stressed how attract-ing private investors can play amajor part in improving thecountry.

“I want people to understandI am a businessman, who hasimported a billion dollar box-ing industry to the Philippines,”he says. “As a congressman, oneof my many goals is to create op-portunities beyond boxing formy fellow Filipinos by helpingto bring billions more in otherindustries and commerce.”

Mr. Pacquiao believes thePhilippines can achieve eco-

nomic development if thegovernment would fo-

cus more on im-proving securityand stability tokeep people safeand encouragepeople to invest.

He knows that thegovernment is able

to help people if they re-ally want to, but the prob-

lem of corruption stands. “Thefuture of our country dependson us being united to help to im-prove our country,” he says.

He recognizes that the im-age people have of the Philip-pines is not particularly good,but Mr. Pacquiao is optimisticand wants to challenge the neg-ative perception of the coun-try by engaging internationalmedia to promote the true rich-ness of the Philippines. “ThePhilippines is a beautiful coun-try and hopefully we can en-courage more people to comeand discover that.”

Boxing champ Manny Pacquiao turned to politics to better serve his fellow countrymen

PHILIPPINES USAT page 1-6.qxd 3/6/11 20:00 Página 1

Distributed by USA TODAYWednesday, June 15, 201122 THE PHILIPPINES


The fight against poverty

“The first priority is social pro-tection, the second is a dramaticincrease in education, and thethird is investments in publichealth, with a focus on mater-nal healthcare,” says FlorencioAbad, Secretary of Budget andManagement. “These are theareas where we have been lag-ging behind. In 2015, which isthe final date of the MDG chal-lenge, we should be able to meetour targets.”

At the top of the list is the re-duction of poverty; according toa census in 2006, 4.6 million Fil-ipino families live below thepoverty threshold. Under a con-ditional cash transfer program,subsidies are being provided tofamilies on certain conditions,such as sending the children toschool and going on regularhealth checkups. By the end ofthis year, the government hopesto provide subsidies to 2.3 mil-lion families, helping the re-mainder by 2015.

“This administration is veryserious about poverty reduc-tion,” says Corazon Juliano-Soliman, Secretary of SocialWelfare and Development. “Ithas demonstrated this com-mitment with 34% of the bud-get going to social services,health, education and three corepoverty reduction programs.”

Spending on education – seenas the key to reducing poverty

– has risen by almost 19%, thebiggest increase allocated in overa decade. Huge progress hasbeen made in providing suffi-cient textbooks, and resourcesare being focused on addressingthe shortages of teachers, class-rooms, and school furniture.

“Everyone is keen on ensuringthat these shortages are met, andthere is a general consensus foreducational reform,” says Sec-retary of Education ArminLuistro.

At the Department of Budgetand Management, Mr. Abademphasizes that government

initiatives to help the poor areon their own not enough, andthat the economy needs to at-tract local and foreign invest-ments to spur growth viapublic-private partnerships.“We realize that investment inpoverty reduction programs will

not ultimately bring you the jobsand make the kids healthier andmore educated; it is the demandcoming from an expandingeconomy, for educated andhealthier people,” he says.

Proceso Alcala, Secretary ofAgriculture, says full advantagemust be taken of the country’s

rich potential for farming – arablefarmland makes up more than40% of the total land area. Pro-grams are being introduced tohelp the nation feed itself, whichthe administration aims toachieve by 2013, but beyond self-sufficiency the aim is to trans-

form agriculture into a modern,dynamic and competitive sec-tor that can serve as a spring-board for the economy. “Wewant to export as much as we canproduce to the neighboringcountries,” says Mr. Alcala. “A lotof people are saying that there isa food crisis issue, but we would

like to treat this as an opportu-nity rather than a problem. Wecan use agriculture as one of themain areas where we can excel.”

As important as the devel-opment of sectors with eco-nomic potential is the need totransform government itself.

President Aquino, who cam-paigned on the basis that with-out corruption there would beno poverty, has committed hisadministration to strict obser-vance of the basic tenets of goodgovernance – in particulartransparency and accountabil-ity. His aim is to rebuild the peo-

ple’s trust in government andencourage international in-vestors to invest in the country.

Cesar Purisima, Secretary ofFinance, says, “We have to ad-dress the issues that have heldus back so that we can acceler-ate the country’s growth andmake it sustainable, ultimatelyreducing poverty.” He adds, “Wereally need to stay focused tofight corruption; there are noquick fixes or shortcuts.”

Fiscally, the government ispursuing a more prudent man-agement of resources and ex-pects to lower and maintain itsdeficit at 2% of GDP by 2013.

At the Philippine Stock Ex-change, president and chief ex-ecutive officer Hans Sicat isaddressing what he calls the twomajor challenges of limited liq-uidity and good corporate gov-ernance. “We are trying topromote transparency and pro-fessionalism,” he says. “Hope-fully, that will improve the viewof investors not just locally, butglobally, as well. I think this willdo wonders for the economybecause we are a major part ofthe fundraising for companies.”

A broader perspective comesfrom the legendary tycoonWashington SyCip, founder ofSGV Group, which represents 51of the top 100 corporations in thePhilippines for both insuranceand tax auditing. “We need eco-nomic and political freedom andwe have to ensure that people areeducated and no longer hungry,”he says. “We need political free-dom not only for the Philippines,but for the whole of Asia anddeveloping nations.”

FLORENCIO ABADSecretary of Budget andManagement

Government departmentsunite across all sectors,rising to the challenge ofmeeting the MillenniumDevelopment Goals(MDGs) on time

‘THE FIRSTPRIORITY ISSOCIALPROTECTION, THESECOND IS ADRAMATICINCREASE INEDUCATION,AND THE THIRD ISINVESTMENTS INPUBLIC HEALTH,WITH A FOCUSON MATERNALHEALTHCARE’

ARMIN LUISTROSecretary of Education

‘EVERYONE ISKEEN ONENSURING THATTHESESHORTAGES OFTEACHERS,CLASSROOMS,AND SCHOOLFURNITURE AREMET, AND THEREIS A GENERALCONSENSUS FOREDUCATIONALREFORM’

MARIO MONTEJOSecretary of Science andTechnology

‘WE MUSTBELIEVE INOURSELVES. WEARE PURSUINGTHINGS INSCIENCE THATPEOPLE INITIALLYTHINK DIFFICULTTO ACHIEVE, BUTWE’RE TRYINGTO INSTILL THECONFIDENCETHAT WE CANDO IT’

CESAR PURISIMASecretary of Finance

‘WE HAVE TOADDRESS THEISSUES THATHAVE HELD USBACK SO THATWE CANACCELERATE THECOUNTRY’SGROWTH ANDMAKE ITSUSTAINABLE,ULTIMATELYREDUCINGPOVERTY’

President Aquino’s government has increased its spending on education by nearly 19%

It is always a challenge to pro-mote the legacy of a man and afamily to become relevant, butin the case of Ninoy Aquinoand his family, the Ninoy & CoryAquino Foundation (AquinoFoundation) has taken up onthis challenge to reach the livesof next generation Filipinos. Tocarry on the legacy of NinoyAquino, Rafael C. Lopa, presi-dent and executive director ofthe Aquino Foundation andnephew of Ninoy Aquino, hasput together a campaign withMekong Worldwide Crew tospread the values of the foun-dation.

“It revolved around the ideathat if there is anything you wantto communicate to young peo-ple, it is the whole idea that thereis a hero and innate goodnessin each one of us,” he says. “Thatis basically how she (CoryAquino) felt we needed to com-municate the legacy of Ninoybecause he really embodied theidea of self-sacrifice for his coun-try and people.”

Thus far, the Aquino Foun-dation has partnered with retailbrands to introduce NinoyAquino to the public throughmerchandise that benefits nu-merous charities. The founda-tion has put together thecampaign with the tagline ‘I ama hero, I do what I believe isright, I do what I believe is good,I fight for justice, I fight for free-dom. I am Ninoy’.

The campaign logo, a pair ofeyeglasses Ninoy Aquino wasknown for, has since become aniconic image. “The basic mes-sage of the campaign was ‘if youwere to see the country throughthe eyes of Ninoy, what wouldyou do now?’” Mr. Lopa says.“The whole idea of ‘I am Ninoy’became a very effective modelfor us to talk about legacy, as itbecame so cool and fashionable

to be a Ninoy in that sense, andwe managed to generate a lot ofinterest in coming together.”

The interest has grown sig-nificantly, having brought to-gether an organization called‘The Ninoy Runners’ and evengathering celebrity support fromapl.de.ap of the Black Eyed Peasto help advocate for the publiceducation problem in the coun-try. The star has agreed to be thefoundation’s brand ambassadorand plans to travel in and out ofthe Philippines to raise moneyfor the programs and promoteawareness about the problem.Mr. Lopa believes that taking theAquino Foundation interna-tionally through well-known Fil-ipino figures like apl.de.ap is thenext step in bringing Filipino is-sues to global awareness.

“We feel the whole idea ofpeople wanting to give back totheir country because they have

been very successful abroadcould be a way to bring themback to help the country further,”Mr. Lopa says.

The current President“Noynoy” Aquino is making it apoint to fight poverty and im-prove the education system. Yet,despite the inclusion of variouspublic-private partnerships putin place to help the governmentdeal with the country’s problemslike malnutrition, hunger andliteracy, finding effective solu-tions is still a challenge. “Every-thing is interrelated and it’sextremely difficult to knowwhere to begin,” Mr. Lopa says.Still, he believes that the AquinoFoundation has helped Filipinosociety progress over the years,despite the small monetary as-sistance it has been able to gath-er. “I would equate the successand impact of a foundation suchas this by how much it has donefor people who have createdmuch bigger things,” he says.

As for the foundation’s future,Mr. Lopa is very optimistic. “Ifwe do our job well, we will real-ly promote the legacy of Ninoyand Cory Aquino and inspireothers to be like these two peo-ple,” he comments. “Then I thinkthis country will be a better placeto live in. This country needsmany leaders that should be ableto look beyond themselves.”

A legacy of freedom fightersFrom a family legacy,President Aquino leads anew era for the LiberalParty and the Philippines

Corazon “Cory” Aquino (1933-2009) was the 11th president of the Philippines and mar-ried to Benigno S. “Ninoy” Aquino (1932-1983), former senator and opposition leader

THE AQUINOFOUNDATION HASPUT TOGETHER THECAMPAIGN WITH THETAGLINE ‘I AM AHERO, I DO WHAT IBELIEVE IS RIGHT, IDO WHAT I BELIEVEIS GOOD, I FIGHTFOR JUSTICE, I FIGHTFOR FREEDOM. I AMNINOY’


Distributed by USA TODAY Wednesday, June 15, 2011 33

THE PHILIPPINES


Phenomenal growth for SM Investments

A surge in the inflow of for-eign direct investment (FDI)into the Philippines this year isbeing forecast by Bangko Sen-tral ng Pilipinas. The centralbank expects $2.2 billion worthof FDI to be registered by theend of 2011 – a staggering83.3% rise on the end-of-yeartotal for 2010.

The reason for optimism isthe implementation this year ofthe government’s private-pub-lic partnership (PPP) program;the five initial PPP projects putup for bidding this year are val-ued at $1.1 billion. Investmentsare also expected to come frommajor Japanese electronics andsemiconductor companieslooking to relocate to the Philip-pines.

A further rise in FDI is pre-dicted for 2012, when the cen-tral bank expects a total of $2.7billion to be registered, basingits prediction, it says, on its re-vised assumptions and outlookfor emerging balance of pay-ments components.

FDI inflows into the Philip-pines have been declining fora decade, but the trend was ex-acerbated last year, when oth-er Southeast Asian economies,such as Malaysia, Indonesiaand Singapore, enjoyed asmuch as a five-fold increase.

This has been blamed largelyon the political uncertaintysurrounding the national elec-tions in May 2010, althoughthe government is fully awarethere are other underlying fac-tors that it has to deal with tomake the business environ-ment more attractive.

Cesar Purisima, Secretaryof Finance, says the Philippinesmust develop its infrastruc-ture, make its policies morecompetitive and reduce cor-ruption. On the fiscal side, thefocus is on being more pru-dent in the management of re-sources. “We hope to reduceour deficit to 2% of our GDPby 2013 and maintain that dur-ing the rest of the President’sterm,” he says.

“President Aquino is tryingto accomplish all of this in hissix-year term. He does notthink he will be able to ac-complish it all, and nobody ex-pects him to, but he wants toput the Philippines in the rightdirection and change things sothat the next administrationwill have no other choice butto continue with the reformsthat he started.”

Florencio Abad, Secretaryof Budget and Management,says the premium placed onintegrity by President Aquino

is crucial. “The perception thatthis is a clean government thatwill promote transparencyand accountability is very im-portant.”

He says the government is

determined to make the Philip-pines competitive in the in-ternational marketplace. “Thisis why we say the Philippinesis open for business. We aregearing ourselves up, so the

Philippines becomes a truly at-tractive business destination.”

A big plus is that the Philip-pine financial system emergedfrom the 2008 global financialcrisis in good shape and has

been building on its currentposition of strength. The cen-tral bank recently noted thatthe continued broad-basedgrowth in bank lending speakswell of the solid growthprospects for the economy;loans for production activitiescomprise more than four-fifthsof commercial banks’ total loanportfolio.

Cesar Virtusio, executivedirector of the Bankers Asso-ciation of the Philippines, saysthat in the last five years (ex-cept in 2008), bank lendinghas grown more quickly, andat a rate that is even betterthan the GDP growth. On topof that, the percentage of non-performing loans continuesto drop – to less than 3%. Hebelieves the banks are wellcapitalized, with ample pro-visioning to absorb externalshocks. “One of the reasonswhy the banking sector is sosuccessful is its competentmanagement and supportiveregulators,” he explains.

Mr. Virtusio says the Philip-pines needs to address the ob-stacles to its growth. “We hopethat we can realize the poten-tial that has been linked to thecountry for a long time now.Now that we have an honestnational leadership backed byable and competent cabinetand heads of governmentagencies, we should have a fairchance to accomplish this.”

Owned by Henry Sy, the rich-est man in the Philippines, SMInvestments Corporation isone of the country’s largestcompanies, dominant in re-tailing, banking and shoppingmall development, and a fast-rising player in residential andtourism-oriented real estate.

SM has been careful aboutmanaging its resources, andhas been growing year-on-yearboth financially and in termsof assets.

“The Philippines is still anemerging country,” says Cora-zon Guidote, vice president forInvestor Relations. “There is alot of potential, so SM is pour-ing a lot of resources into grow-ing all of its core businesses.”

The most profitable part ofthe group is the retail business,which has been undergoingsignificant expansion. With 28new stores opened in 2010,and several more this year, SMnow has 144 retail outlets na-tionwide. These include 41 SMdepartment stores, 31 SM su-permarkets, 43 SaveMorebranches, and 25 SM hyper-markets. The group also hastotal ownership of PilipinasMakro, which has 4 Makrooutlets.

“Retail has a lot of potential,”says Ms. Guidote. “We aremainly focused on MetroManila now, but there is still alot of potential in the provinces,and that is where we are grow-ing at the moment.”

SM is also dominant in shop-ping malls, boasting no fewerthan 41 across the country. Bythe end of 2011, the number ofmalls in the Philippines willhave risen to 43, and an addi-tional mall will have beenadded to the three the groupalready has in China, in thecities of Xiamen, Jinjiang andChengdu.

Ms. Guidote recalls that thevery first mall the companyopened was a mere 1.3 millionsquare feet, but was already thelargest mall in the country. “Itwas at the height of the Mar-cos crisis, when the father of thecurrent president was assassi-nated; we could not have goneinto the market at a worse time,”she says. “But the growth hasbeen phenomenal. It is nowour largest and one of our mostprofitable malls, and we arecontinuing to expand it. Dailyfootfall there is at least 700,000to over 1 million, and the oc-cupancy rate is about 97%.”

Starting to challenge retailas the group’s main driver is itsbanking business; SM’s banknetwork is the largest in thePhilippines. In the final quar-ter of last year, BDO Unibank,in which SM has a 41% inter-est, became the country’slargest bank in terms of assets,

with 726 branches nationwide.Chinabank, in which the grouphas a 20% interest, is the eighthlargest with 269 branches na-tionwide.

SM’s rapidly expandingproperty business has interestsin residential, commercial,leisure, and hotel development.

Its current portfolio includes 14residential projects, 13 of whichare in Metro Manila and onein Tagaytay City in the provinceof Cavite. This year will see thelaunch of at least five new res-idential projects, all located inprime locations within MetroManila.

Last year, SM’s net profitswere better than expected, ris-ing by 15% to Php18.4 billion(around $420 million), withconsolidated revenues in-creasing by 12% to Php179.3billion from Php160.1 billion in2009. The largest contributioncame from retail (34%), withbanking second (30%), fol-lowed by shopping malls andreal estate (23% and 13% re-spectively).

SM has increased its capitalexpenditure program to Php47billion this year, from Php40.6billion last year, and with all itscore businesses continuing togrow, expects to sustain dou-ble digit growth in 2011. Cer-tainly, it began the year on apositive note, posting a 13% in-crease in net income in the firstquarter.

Corazon Guidote attribut-es the group’s success to a high-ly focused approach that shesays has made it part of the psy-che of Filipinos.

“The Filipinos have beenwith us over the years in termsof growing the brand and thebusiness,” she says. “SM reflectsthe progressive spirit of the Fil-ipinos; we would not grow if themarket did not support us.”

The Philippines is “open for business” and backed bybroad-based bank lending growth and greatertransparency, accountability and competitiveness

From commercial and retail to residential and leisure development, the corporation does not shy away from large investments. SM has been highly successful, to boot

The Aquino administration has set in motion a series of fiscal and management reforms in order to raise transparency

SM is a very consumer-oriented company focused on serving the Filipino community in the best possible way

Sustained economic growth



Distributed by USA TODAYMonday, June 20, 201144 THE PHILIPPINES

Ranked among the top fivecommercial banks in the country, Land Bank of thePhilippines is a governmentinstitution that plays a uniquerole promoting countrysidedevelopment while remain-ing financially viable. Thebank has grown into thelargest formal credit institu-tion in the rural areas and to-day offers a full range ofbanking services.

Gilda Elepano Pico, CEOand president of Land Bank ofthe Philippines since No-vember 2006 and vice-chair-man since August 2005, hasworked in various depart-ments in Land Bank since1981. Here Ms. Pico discuss-es Land Bank’s role in thecountry’s sustained growth.

AAggrriiccuullttuurree iiss tthhee bbaacckkbboonnee oofftthhee PPhhiilliippppiinneess’’ eeccoonnoommyy..HHooww ddooeess LLaanndd BBaannkk ssuuppppoorrtttthhee sseeccttoorr??

The agriculture sector playsa very crucial role in shapingthe country ’s overall eco-nomic growth and develop-ment. It remains as one of themost economically significantand promising industries inthe Philippines in terms of itsvast potential and opportu-nities for expansion andgrowth.

This is primarily why LandBank is helping the farmersand fisher folk sector throughfinancial and technical assis-tance. We want to reach asmany farmers and fisher folkas we can, and we tap ruralbanks and cooperatives whichserve as conduits in extend-ing the much-needed creditsupport to our mandated sec-tor. We are working withabout 500 rural banks andtheir branches and over athousand cooperatives in or-der to serve farmers and fish-er folk across the country.

Preparation is very impor-

tant when lending to farmersand fishermen. We have es-tablished a group in LandBank called the DevelopmentAssistance Center which fo-cuses on the institutional andcapability building of thesecooperatives.

The success of the bank de-pends on the strength of theconduits. Before we lend tothem, we make sure that theyare prepared technically interms of bookkeeping and inother areas of managing theirbusiness.

Another basic thing we re-quire from them is equity. Ifthey do not have a stake inthe business, they can easilyabandon the project. So forevery one peso that they putin the cooperative, we givethem six pesos in loans. Theyuse these loans for relendingto the small farmers and fish-er folk.

The other priority sectorsof Land Bank are the microsmall and medium enterpris-es, livelihood, agribusinessand agri-infrastructure, re-newable energy and water.

AArree yyoouu ddeevveellooppiinngg aannyymmoorree pprroodduuccttss ttoo ttaarrggeetteevveenn mmoorree ffaarrmmeerrss??

Yes, we developed asynergy programcalled the Food Sup-ply Chain Program,which is in support

of the national government’sthrust of promoting food se-curity. The objective is to in-crease farmers’ income byproviding financial and tech-nical support along the value-added chain of a commodityor industry.

We launched this last yearwhere we allocated P50 billion($1.15 billion) for the pro-gram, particularly to supportthe financial requirements forcrop, livestock and fisheryproduction, working capitaland acquisition of processingand other fixed assets.

Land Bank provides fi-nancing to all the playersalong the value chain system,consisting of a full range ofactivities that are undertakenin turning a particular prod-uct into a form that is soldand consumed.

At the outset, a coopera-tive and a processor will es-tablish production, technicaland marketing contracts,where the cooperativethrough its farmer memberscommits to supply the proces-

sor with their produce basedon the latter’s product re-quirement.

The processor, on the oth-er hand, commits to buy theproduce of the cooperativesat a competitive price; andmay also commit to providethe necessary inputs and tech-nical assistance if only to en-sure product quality andstandards. The processorthen makes use of the pro-duce to convert it into a prod-uct that will again be an inputto another activity.

It is really a complete chainfrom farm production to pro-cessing to marketing. Farm-ers will now be assured thattheir products will be bought.The problem in the past wasthat there was no market fortheir produce, so we are nowaddressing that situation.

In line with that, Land Bankis also investing in research.We have linked up with uni-versities and state colleges inthe provinces and the coun-tryside so they can study andresearch how farmers can in-crease their production andprofitability. We will pilot testtheir findings and if success-ful, the idea will be marketedto the farmers so they canadapt the technology. Wethen pilot test their recom-mendation and, if successful,encourage farmers to adoptthese new technologies.

SSppeeaakkiinngg ssppeecciiffiiccaallllyy aabboouuttyyoouurr iinnssttiittuuttiioonnaall iinnvveesstt--mmeennttss,, wwhhaatt aavveennuueess ddoo yyoouulliikkee ttoo ggoo ddoowwnn,, bbeessiiddeess aaggrrii--ccuullttuurree oobbvviioouussllyy??

Our priority sectors are notjust the small farmers andfisher folk. We also supportSMEs and we finance localgovernment units for infra-structure projects. We alsosupport renewable energyand water projects as well asthe requirements of govern-

ment agencies and corpora-tions because we are a gov-ernment bank. For example,if the NFA (National Food Au-thority) requires financing fordomestic rice procurement,then we lend to them.

Local government units arecrucial in the food supplychain and in the developmentof the rural economies. Weneed infrastructure so thatthe produce of the farmerscan be brought to the tradingcenter at the least cost possi-ble. Sometimes it takes thema long time to transport fromthe farm to the trading areas,so transport costs are high.We finance local governmentsso they can build farm to mar-ket roads and rural infra-structure.

Land Bank cannot do thisalone; it needs the support ofthe other units and local gov-ernments.

Land Bank has adopted anintegrated countryside de-velopment philosophy. Thissynergistic framework is themost effective approach.Adopting a silo approach to-wards countryside develop-ment has a higher risk offailure.

WWhhaatt ffiinnaall mmeessssaaggee wwoouullddyyoouu lliikkee ttoo sseenndd ttoo tthhee rreeaadd--eerrss??

Well, for one, we’d like to in-vite them to visit our countrynot only to behold the manynatural wonders in the Philip-pines, but also to explore pos-sible investment options.

On our part at Land Bank,we will continue to do ourshare in promoting econom-ic growth, especially in thecountryside where potentialareas for development areendless. Ultimately, we wouldlike to see Land Bank fulfill itsmission and be able to touchand make a difference in thelives of the people we serve.

CEO and president of Land Bank of the Philippines, Gilda Elepano Pico shares the ins and outs of this government bank entrusted with boosting agricultural and rural sectors

Land Bank, dedicated to financing rural development

‘OUR FOOD SUPPLYCHAIN PROGRAM

AIMS TO INCREASEFARMERS’ INCOME BY

PROVIDING FINANCIALAND TECHNICAL

SUPPORT ALONG THEVALUE-ADDED CHAIN

OF A COMMODITY ORINDUSTRY’

‘WE SUPPORT SMALLFARMERS, FISHER

FOLK, SMES, LOCALGOVERNMENT FOR

INFRASTRUCTUREPROJECTS. WE ALSO

BACK RENEWABLEENERGY AND

WATER PROJECTS’

GILDA ELEPANO PICO, CEO and President

of Land Bank



THE PHILIPPINES


Working in partnership withthe government, Metro Pa-cific Investment Corp.(MPIC) is at the forefront ofthe nation’s infrastructure de-velopment. The new admin-istration has sought todevelop public-private part-nerships to jump start infra-structure development.“MPIC is in a good positionto facilitate the government’sgoals,” says president andCEO of MPIC Jose Ma. K.Lim.

At the helm of one of thecountry’s most recognizedcompanies for delivering ba-sic services, Mr. Lim explains:“MPIC has a track record ofsecuring its contractual reg-ulatory returns from the gov-ernment and delivering to thepublic the service they de-serve. At our portfolio com-panies, we have improvedservice delivery by any rea-sonable metric with more ef-

fective management. That isMPIC’s claim to fame: we takeproblematic companies, turnthem around and raise thelevel of service. These are ob-jectives that we continue tomeet on a daily basis.”

Maynilad was in rehabili-tation and unable to providewater to 3 million people inits concession. In a little overtwo years, it has reduced thenumber of un-served peoplein its concession by 1 millionand recorded a profit of $111million in 2010. It is invest-ing nearly $1 billion over thenext five years to ensure mostof the remaining 2 millionpeople are connected whileworking closely with its reg-ulator to ensure money isspent effectively and pricesare not unduly raised for thepublic.

At Meralco, the largestelectricity distributor in thecountry, the progress can beseen in its financial returns.Under previous ownership,it had been unable to secureits regulatory mandated re-turns – earning only $61 mil-lion in 2008. With the changein ownership, its tariff hasnow been adjusted to a pointthat provides it with the fi-

nancial flexibility to providean adequate return – earn-ing $283 million in 2010 –while allocating a significantamount for an entry intopower generation. Powergeneration is the largest com-ponent of the power bill, at58%, for consumers. Meralcois best placed to provide con-sumers with relief from highpower costs with its abilityto predict the optimum timeto invest given its extensiveknowledge of consumptionpatterns.

At the parent company lev-el, MPIC has a five-year in-vestment plan which includesPhp25-26 billion ($610 mil-lion) for roads and Php3.7 bil-lion for hospitals.

MPIC is extending its roadnetwork to improve com-merce and convenience. Itsflagship project is the con-nection of the Northern andSouthern toll road systems inLuzon, the main island group-ing in the country, throughthe heart of Metro Manila,the country’s largest urbanarea. It will improve travelfrom over an hour and a halfto less than 20 minutes and,more importantly, allow com-mercial vehicles to avoid thetruck-ban on public roadsduring certain times of theday, facilitating access to thecountry’s major ports locat-ed within the metropolis.

MPIC develops world-classmedical facilities with the ac-quisition of existing hospitalsthat are then improved withcapital expenditures and pro-fessional management. Overthree years MPIC acquiredfive hospitals. Its hospital net-work is now the largest in thePhilippines, present all overthe country. The company islooking forward to addingmore hospitals to this net-work with a target of approx-imately 10 hospitals and atotal of 3,000 beds around thecountry.

MPIC is constantly seekingnew areas for developmentoutside an already impressiveportfolio. Amongst these newareas are an airport and rail-way system, both of which ser-vice Metro Manila and are inneed of investment.

“It is essential for the coun-try to have basic services at ahigh standard for it to be com-petitive. If water is not potable,if electricity is too expensive,or if it takes too long to trans-port goods, we will never beable to compete in an inter-national market,” says Mr. Lim.It is with the expertise of MPIC

A proven track record, a partner for progress

MPIC has grown fromstrength to strength,expanding infrastructuredevelopment, turningcompanies around tobecome competitive,meeting the needs ofFilipinos across the nation

Jose Ma. K. Lim, President and CEO of Metro Pacific

New public private partnerships

The government plans to en-gage in public private part-nerships (PPPs) as a means offunding the public works andpublic services projects need-ed to boost the economy.

“We cannot rely on publicfunds alone to spur the coun-try’s growth,” says PresidentAquino. “We need additionalinvestments from our partnersin the private sector. As somany others before us havefound, and as many others af-ter us must discover for them-selves, working togetherworks.”

The country needs to mod-ernize its roads, bridges, air-ports, transportation andcommunications systems forthe efficient movement ofgoods and people, as well as tobuild the competitiveness ofthe tourism industry. ThePhilippines must also invest inother critical infrastructure,

such as water supply projectsand more efficient irrigationsystems to increase farm pro-ductivity. The President saysPPPs will provide thousandsof jobs, growth in the econo-my and long-term mutuallybeneficial partnerships withlarge corporations.

Grants totaling $8.5 millionare being provided by theManila-based Asian Develop-ment Bank (ADB) and the Aus-tralian government to get thePPP program underway, withthe Philippine governmentproviding a further $8 million.A newly established PPP Cen-ter, attached to the NationalEconomic and DevelopmentAuthority (NEDA), the coun-try’s independent economicdevelopment and planningagency, will provide technicalassistance and help facilitatethe development of proposals,ensuring that the approval

A longstanding lack of funds has hindered crucial investment in the Philippines, holding back economic development. Now the government believes it has found a way around the problem

This past March, a raft of PPP infrastructure projects came up for bidding, worth an estimated $1 billion

ROGELIO SINGSONSecretary of Public Works & Highways

CAYETANO PADERANGADirector General of NEDA

and the support of govern-ment that dreams for changeand development will becomea reality.

MPIC has a 45% float anda predominantly institution-al shareholder base spreadglobally.

process will be completed with-in just six months.

Cayetano Paderanga, direc-tor general of NEDA, says, “PPPsare one way we can leverage pub-lic resources with private fi-nancing as well as expertise. Oneof the reasons why we want pri-

vate sector participation is be-cause of management expertiseand efficiency in terms of pro-ject implementation as well asmaintenance.”

He appeals to potential in-vestors to come and look at thePhilippines. “We have several

approaches, including the so-licited proposals approach.We prefer these, but we willstill welcome unsolicited pro-posals. We are looking at jointventures as a variation to theBOT (build-operate-trans-fer) process. There are severalways where people can getinvolved when it comes toinfrastructure and otherkinds of investments.”

The first batch of PPP pro-jects was lined up for biddingin March, with an estimatedprivate investment of morethan $1 billion. Most of theprojects come under the aegisof the Department of Trans-portation and Communica-tions and the Department ofPublic Works and Highways.

Rogelio Singson, Secretaryof Public Works and High-ways, says, “We need to makethe Philippines more global-ly competitive, and the lack

of infrastructure in the coun-try is holding us back. Thereare a lot of opportunities forthe private sector to developmore infrastructure, whetherit is roads, airports, seaports,or telecommunications. En-ergy and water utilities arealso in demand.”

The national highways net-work is substandard andpoorly maintained, and thefocus is on upgrading the na-tional roads to internationalstandards.

“We are way behind Malay-sia, Thailand and Indonesia interms of road infrastructureand international standards,”says Mr. Singson. “We are look-ing at long stretches of toll roadsand expressways being pushedtowards the private sector, long-term road maintenance con-tracts and at passing on bridgeconstruction and mainte-nance.”




By the second half of the1990s, electronics had over-taken agriculture as the lead-ing export industry, and foryears now the Philippines hasbeen one of the world’s mainexporters of high-tech prod-ucts.

The global economic crisishit the electronics industryhard, and exports fell by morethan 28% to $22 billion in2009. Since then, however,the industry has rebounded,posting an increase in exportsin 2010 of more than 41% toover $31 billion – arecord-breaking ex-port value.

Today the elec-tronics sector, whichis dominated bymultinational cor-porations, remainsthe largest contrib-utor to the economy,accounting for 61%of total exports lastyear. Semiconduc-tors are the leadingproduct, and Japanis the largest cus-tomer.

Electronics fromthe Philippines werein high demand lastyear, and made a ma-jor contribution toan overall record-breaking perfor-mance, with thePhilippines postingits highest exportrevenues for 11 years. Ac-cording to the Department ofTrade and Industry, total rev-enues grew by almost 34%,reaching in excess of $51 bil-lion. In addition to high-techproducts, the garments andtextile industry reversed yearsof stagnation to achievegrowth of almost 12%, bring-ing in $1.6 billion.

The Export DevelopmentCouncil attributes this to therecovery of the economies ofsome of the Philippines’ ma-jor markets, notably the Unit-ed States, Japan, and Hong

Kong, as well as to the ongo-ing growth of China.

Gregory Domingo, Secre-tary of Trade and Industry,says the strong showing in2010 demonstrates that theexport strategy of enhancingcompetitiveness and openingmarket access through tradeagreements is “on track”. ThePhilippine Export Develop-ment Plan 2011-2013 targetsa doubling of total exports to$120 billion by 2016.

Data published earlier thisyear by the United Nations’

Commission on Trade andDevelopment (UNCTAD)showed that since the globalfinancial crisis the Philippinesand other Asian exportershave continued to take mar-ket share from Western coun-tries in high-tech goods andcomponents. According to

UNCTAD, “...the global fi-nancial crisis has led to sig-nificant shifts in world tradeof ICT goods towards Asia.”

The pace of export growthis forecast to slow this yearthrough disruption of thesemiconductor supply chainfollowing the devastatingearthquake and tsunami inJapan. However, the Nation-al Economic and Develop-ment Authority (NEDA)expects the impact on the ex-port earnings of the elec-tronics industry to be

temporary. At the Department

of Trade and Indus-try, Mr. Domingo recently expressedconfidence that over-all exports couldgrow by more thanthe government’s tar-get of 10% this year.N o n - e l e c t r o n i c s industries con-tributed around 10-12% growth in thefirst quarter of theyear, with a 100% in-crease in coconut oilexports, and furni-ture exports up by50%.

The Semiconduc-tor and ElectronicsIndustries in thePhilippines (SEIPI)forecasts that its sec-tor will grow by 8-12% this year, despite

the situation in Japan. This confidence is shared

by Sergio Ortiz-Luis, chair-man of the Philippine Cham-ber of Commerce andIndustry and president of thePhilippine Exporters Con-federation, who says that theexports target for 2016 stillstands.

“There is uncertainty due tothe disaster in Japan and theconflict in the Middle East,but these are temporary,” hesays. “We are confident thatJapan would pick up after themiddle of the year.”

A world-class exporterof high-tech productsForty years ago, the Philippines had only traditional agricultural exports. That startedto change in the1970’s when the Philippine electronics industry got under way, spurredby industrialized nations seeking alternative locations offering lower production costs

The Philippines is home to some of Asia’s oldest universities

The Philippines is made up ofa well-educated population thathas traditionally put much em-phasis on formal schooling;however, Dr. Patricia Licuanan,chairwoman of the Commis-sion of Higher Education(CHED) believes in a more prac-tical approach for the countryand is not pressing the need forhigher education for all Filipinos.

“There has to be a shift in at-titude so that we also respectand value technical and voca-tional education,” says Ms.Licuanan. “We are too whitecollar in our attitude. For theMillennium DevelopmentGoals, basic education is nec-essary.”

CHED recognizes that theneed for basic education isgreater than that of higher ed-ucation, and plans to use in-struction, research andextension, to combat poverty

with community and social de-velopment oriented ap-proaches. She stresses thatR&D is important for devel-oping innovations that canchange the quality of life forcommunities.

“For instruction it may notbe as clear but there are pro-grams in higher education thatcater to developing the lowersectors in society,” says Ms.Licuanan. “Not enough of ouryoung people enter agricultureanymore and there is certain-ly not enough that go into sci-ence and technology. These arenecessary and we think high-er education does have a role.”

She aims to clean up corrup-tion and improve technologyand service quality to makeCHED a more effective com-ponent in the government machine. “This is really our chal-lenge for higher education: to

work with the really good basicingredients we have and juststraighten up the parts that needit and bring in some technolo-gy inputs in strategic areas thatwe aim to develop,” she says.

CHED is looking beyond Fil-ipino borders to aid in devel-opment by focusing on theinclusion of successful peopleabroad to start projects and be-come mentors. She aims toshow the world the potential ofthe country as it takes steps toachieve a noticeable amountof change.

“I’d like them to see thePhilippines truly as an excitingand positive place to be for for-eigners and Filipinos,” saysCHED’s chairwoman. “I may bebiased but Filipinos are verycreative and intelligent peopleand once we set our minds tosomething we can achieve somuch.”

Educating the people,the nation’s treasureWith a long running educational tradition, for the Philippines supplying adequateresources for the educational system behind the quality of its workforce is essential

Technology is seen as the foun-dation of future economic de-velopment, and by harnessingthe creativity and ingenuity ofthe Filipino people, the gov-ernment hopes to build new in-dustries, make existing onesmore productive, and createmore and better-paid jobs. In-novation, it believes, will giverise to new opportunities andoffers the potential for unlim-ited growth.

“We are using science andtechnology to improve our in-dustries and make them morecompetitive,” says Mario Mon-tejo, Secretary of Science andTechnology.

The National Innovation

Strategy – dubbed Filipinnova-tion – is based on a public-pri-vate partnership, spearheadedby the Department of Scienceand Technology (DOST), IBM,Asian Institute of Management(AIM) Policy Center and theIntellectual Property Office ofthe Philippines, and involving ahost of other stakeholders, in-cluding leaders from industry,government, academia, and civ-il society.

Ultimately, the aim of Filip-innovation is to brand the Philip-pines as an Asian innovationhub that is distinct from its Asianneighbors but able to competeeffectively with them and thatstrives to match the world’s lead-

ing innovation regions, such asNorth America and Europe.

The vision is of a competitiveand multidisciplinary Filipinoworkforce producing value-added knowledge-based prod-ucts and services of globalstandards, and of competitive lo-cal firms driven by constant in-novations based on researchand development.

The government sees its roleas being to create an environ-ment in which innovation is en-couraged and can flourish, withgovernment, academia, and theprivate sector working towardsa common goal.

Mr. Montejo believes that giv-en such a positive climate Fil-

ipino researchers will come upwith products, services, andtechnologies that are competi-tive. “It is important for us tobelieve in ourselves,” he says.“We are pursuing things in sci-ence that people initially thinkdifficult to achieve, but we aretrying to instill the confidencethat we can do it.”

He argues that innovation isrequired in fields as diverse asmass transit, flood monitoringand food control. “We aim tocome up with simple solutionsthat will reduce problems. Forexample, there is a lack of drink-able water here, so we are in-troducing a low cost water filtermade from clay. It is a very cheap

and simple process and by us-ing the filter we aim to reducethe number of those contract-ing dengue fever.

“By promoting the con-sumption of brown rice and de-veloping a process to prolong itsshelf life, we are trying to ad-dress the rice shortage,” he says.“For disaster mitigation, we areinstalling locally developed au-to weather stations, water levelsensors and rain gauges.”

A variety of programs havebeen launched to support the in-novation drive, such as the En-gineering Research andDevelopment for Technology(ERDT) consortium, involvingseven universities, which is

aimed at producing a criticalmass of engineers with ad-vanced degrees and at promot-ing research and developmentas a way of addressing issues ofsustainability, health, securityand quality of life.

An Open Technology Busi-ness Incubator has been estab-lished by DOST and thePhilippine Economic Zone Au-thority (PEZA) to promote thegrowth of technology-basedICT startups, while the De-partment of Agriculture haslaunched a program to enhancethe delivery of accurate agricul-ture and fisheries informationto assist business developmentand decision making.

Innovation at the nation’s heartInnovation is the buzzword in the Philippines, where generation of new ideas for products and services is a crucial element of the national strategy for boosting competitiveness

IN 2010, THEPHILIPPINES POSTEDITS HIGHEST EXPORTREVENUES FOR THEPAST 11 YEARS,REACHING OVER $51 BILLION



THE PHILIPPINES


Starting off in 2004 as a Fil-ipino company providing con-tact solutions, moving intolegal transcriptions shortly af-ter (ScopeWorks Asia), andthen acquiring Australiansalary packaging administra-tion company SmartSalary Pty,Paxys is today a global holdinginvesting in business processoutsourcing (BPO) companiesand related sectors within theAsia Pacific region. It also pro-vides management and ser-vices such as human resources,finance and business develop-ment through its subsidiaryPaxys Global Services.

The first call center to be list-ed on the Philippine Stock Ex-change, Paxys recently jointlyincorporated two new centers,Stellar Global Solutions Philip-pines (with the Stellar Groupof Australia) and WNS Philip-pines (with WNS Holdings ofIndia). Paxys also provides in-formation technology and soft-ware systems through its GlobalIdealogy Corporation (GIC),with offices in Singapore, thePhilippines and Malaysia,which offer services such as in-

ternal systems developmentand email management.

As such, Paxys is able to of-fer both inbound customermanagement services, such asorder taking, help desk andtechnical support, and out-

bound services, including tele-marketing, tele-collection andsales verification, in addition toother BPO services compris-ing research, financial admin-istration, and human resourcefunctions. Paul Martin, VP ofBusiness Development andClient Management at Paxysand managing director at GIC,says this means that “when wego to market, we do not just saythat we are voice or IT. We un-derstand what the customerwants, and we can do voice

from here and the IT fromthere, which gives clients amore holistic experience withmore of a personal feel.”

Its advantages in the Eng-lish language and cultural affin-ity with the U.S. aside, Mr.Martin says that the real com-petitiveness of the Philippinesin BPO lies in its people. “Onething that can’t be replicatedeasily is customer service. Inother countries in Asia theyare proud of their technicalability for example, but Fil-ipinos are proud of customerservice,” he comments.

Mr. Martin says the BPO in-dustry reacted quickly to theinternational financial crisis,despite its close links to theU.S., by taking the opportuni-ty to reflect on its core strengthsand build on them.

He says, “You can see nowmany of the BPO companiesare building new facilities, hir-ing more people and an-nouncing new engagementsall within a relatively short spanof time. It’s encouraging to bepart of a nation building en-terprise like the BPO industry.”

Organizing businessesthe world roundThe first call center to be listed on the Philippine Stock Exchange, Paxys provides awide range of services, including BPO, telemarketing, and IT and software systems

Filipinos are techies. Thecountry’s ICT sector has beena leading driver of the econo-my for the past seven years,driven by domestic demandfor telecommunications prod-ucts. Electronic goods com-prise 60% of Philippineexports. Also, the country pro-

duced almost 56,000 engi-neering and technology-re-lated graduates in 2008, andboasts one of the best ICTtraining infrastructures in allof Asia. Finally, the Philippinesis even ranked number oneglobally in SMS usage.

It is therefore no surprise

that Cebu City was recentlypositioned as the number oneemerging destination for busi-ness process outsourcing(BPO), an advantage it wantsto parlay into knowledgeprocess outsourcing, an up-and-coming sector in thecountry, which normally in-

volves high-value work car-ried out by highly skilled staffand is currently dominated byIndia. Most experts agree,however, that the Philippinesis set to become an increas-ingly important competitor,and has already surpassed In-dia as the world’s call centerhub.

Indeed, the only sectorgrowing faster in the Philip-pine economy than ICT is itsBPO sector. The Philippineshas become a global power-house in the industry, espe-cially for voice-based(Filipinos have a high level ofEnglish and a cultural affini-ty with the U.S.) and back-of-fice work. It was worth $9billion in 2010, representingover 3.5% of GDP and 10% ofthe global outsourcing market.The government is targetingrevenues of $11 billion thisyear, as well as the creation of84,000 new jobs, which would

bring the total number of IT-BPO workers in the countryto 610,000.

With such a tech-savvypopulation and economical-ly powerful industry, the coun-try’s choice for the man tooversee it all is at first glancecurious – Ivan John E. Uy,chairman of the Commissionon Information & Communi-cations Technology (CICT)since July 2010, and a formermember of the Philippine ju-diciary. A closer look, how-ever, reveals the particulargenius of his appointment.

A known cyber law expert,Mr. Uy helped to transformthe workings of the country’sjudiciary in his position aschief information officer ofthe Philippine Supreme Court.He says, “I had the privilege ofbeing able to bring in innova-tion to transform the waythings were done in the judi-ciary by making it more trans-

parent and efficient. My chair-manship of the CICT allowsme to do that at a national lev-el. I couldn’t pass up thechance.

“Most government struc-tures are created under an in-dustrial age model. Theyoperate in vertical silos (for ex-ample, agriculture, environ-ment, education, etc.). The newmodel is flat. Information isshared across the board. As longas the government operates inthose silos, then information iskept there. This worsens bu-reaucracy and red tape.”

He adds, “CICT is really de-signed to take on multi-facetedroles as a business facilitatorand a strategic, innovation-ledgovernment unit that ensuresthe country’s competitiveness.We are at the intersection ofevery point in the matrix; weare the ‘e’ in everything – e-health, e-commerce, e-duca-tion.”

No longer a mere overseas call center Business process outsourcing is growing and maturing into knowledge process outsourcing in this tech-savvy island nation

Sitel has been namedthe top global callcenter outsourcingprovider by The BlackBook of Outsourcing

‘IT’S ENCOURAGINGTO BE PART OF ANATION BUILDINGENTERPRISE LIKE THEBPO INDUSTRY’

From morethan 135 o n s h o r e ,

nearshore and offshore loca-tions spanning 26 countriesworldwide, Sitel’s clients havetheir customer care and trans-action processing needslooked after by its 52,000highly trained associates in36 different languages.

The seven call centers Sitelhas set up in the Philippinesover the past 10 years representthe company’s largest offshorecontact center hub and form anessential part of its global en-terprise. “President Aquino saidthe right thing – the Philip-pines is open for business,” saysSteve Barker, general manag-er of Sitel in the Asia Pacificregion. “You do not have totrade any quality outcome as aresult of having moved yourbusiness transactions or cus-tomer interactions to thePhilippines. You can certainlyimpact your profit and loss, getan improved consumer expe-rience, and have the advantageof a location that makes sensefor whatever your business re-quirements may be.”

By reducing service costs,improving customer retentionand increasing revenue percustomer, Sitel delivers the bestpossible return on customerinvestment for its clients. Itsrange of services includes cus-tomer care, customer acquisi-tion, technical support, riskmanagement, back-office pro-cessing, and collections andreceivables.

“We do not have a newspa-per to sell or hotel rooms torent. Here in Sitel, we recog-nize that our agents are ourbusiness,” says Mr. Barker. “Weaspire to be the best BPO busi-ness in Asia Pacific. That startswith our agents. To ensure thatwe get the best agents, we needthe best coaches. They have tobe managed by the best oper-

ations managers that we canfind. We go out of our way tofind the cream of the crop be-cause our clients and our agentsdeserve that.”

Privately held and majority-owned by the diversified Cana-da-based Onex Corporation,Sitel places great importanceon the quality of the educationand training of its employees.Its Sitel Academy has threefacets to it: in-classroom acad-emies, mobile academies thattake learning out into commu-nities, and partnerships withuniversities and government

departments. It also has itsown management trainingschedule called Track Training.“You have to develop the rightpeople and send them out withthe right expertise,” says Mr.Barker.

Sitel has been lauded thenumber one global call centeroutsourcing provider by TheBlack Book of Outsourcing –the world’s largest independentinvestigation into customer sat-isfaction in the industry. Sitel received the top score in 11 crit-ical performance categories, in-cluding vertical expertise,reliability, innovation, trust,flexibility and customization.

In addition, for the sixth yearin a row Sitel has been select-ed as one of the best customercare outsourcing providers inthe world and features in The2011 Global Outsourcing 100list. The annual ranking is com-piled by the International Association of OutsourcingProfessionals (IAOP) – theglobal, standard-setting orga-nization and advocate for the profession. IAOP judgeproviders on four critical char-acteristics: size and growth, customer references, organi-zational competencies andmanagement capabilities.

Mr. Barker adds, “We want tobe in a position where our cus-tomers are more successful byhaving Sitel by their side. Wewant to make sure that we havethat structure and talent in placeand that our clients are seeingthe value of being associatedwith a global footprint master.”

Innovative BPO service andtraining solutions from SitelSitel is a global leader in the business process outsourcing (BPO) industry and providesits clients with fully integrated customer care services by highly trained experts

STEVE BARKERGeneral Manager of Sitel, Asia Pacific

Stream Global Services is apremium international busi-ness process outsourcing(BPO) provider whose sales,customer care and technicalsupport services enable itsclients to increase revenuegeneration, operational effi-ciencies and brand loyalty.The Boston-based companymerged with eTelecare in 2009and has eight call center fa-cilities across the nation. JaredMorrison, vice president andcountry manager of Streamin the Philippines, outlines thecompetitive advantages ofboth the country and the com-pany.

CCaann yyoouu ccoommmmeenntt oonn tthheeddeeffiinniinngg ffeeaattuurreess ooff tthhee nneewwggoovveerrnnmmeenntt??

There has definitely beenan improvement in terms ofvisibility and ease of doingbusiness. The new adminis-tration is finding ways to decrease red tape and bu-reaucracy. Policies and regu-lations have become morebusiness and investor friend-ly. In addition to transparen-cy, wealth distribution isimproving. There is a growingclass of young professionalsmaking their mark.

DDoo yyoouu ffeeeell tthhaatt tthhee gglloobbaall iinn--vveessttmmeenntt ccoommmmuunniittyy iiss ffuullllyyaawwaarree ooff tthhee ppootteennttiiaall ooff tthheeccoouunnttrryy??

I do not think so. Ameri-cans are familiar with thePhilippines. It is getting somereputation in the U.S. market,particularly in the BPO in-dustry because there are somany people here.

One of the reasons why thePhilippines has become so suc-cessful is that we’ve seen a lotof voice work diverted to thePhilippines. There is also thehigh quality of customer carethat can be delivered here.

Also, the country capturedthe BPO voice services mar-ket due to the neutral quali-ty of their accents. Filipinosare easier to understand so itis easier to communicate withthem. The service profes-sionals are experienced andknowledgeable.

We are at an importantpoint of the growth stage. Theindustry is huge here. The keyis for it to maintain its goodreputation.

WWhhaatt ootthheerr nnaattuurraall aaddvvaannttaaggeessaarree hheerree??

There is a natural affinity forWestern culture. There are

American movies in the the-aters, American brands areavailable in the retail areas andthere is a following for Amer-ican sports teams. That can’tbe said in many offshore BPOdestinations.

Also, people are naturallynice and pleasant. Visitors im-mediately notice the opennessand helpfulness of the locals.This is especially importantfor functions with clients call-ing about their problems

HHooww aarree yyoouu wwoorrkkiinngg wwiitthhaaccaaddeemmiiaa ttoo sseeccuurree aasstteeaaddyy ffllooww ooff hhuummaannccaappiittaall ffoorr tthhee BBPPOO iinn--dduussttrryy??

We have partner-ships with morethan 12 universi-ties here in thePhilippines andwe providethem withour hiring

profile. We also offer in-houseEnglish courses.

We have some languagetraining expertise, and wework with the universities tohelp them see what our re-quired curriculum looks like.

WWhhyy iiss nnooww tthhee rriigghhtt ttiimmee ttoosshhoowwccaassee tthhee FFiilliippiinnoo BBPPOO sseecc--ttoorr iinntteerrnnaattiioonnaallllyy??

If you take care of the peo-ple who work for you, providea good work environment, en-able them to be successful andprovide competitive wages,they will in turn trust you anddo a good job for your clients.When they do a really goodjob for your clients, you do nothave much to worry about.

Nobody can say that the in-dustry is a fluke, or that it is notsustainable. When I look at ourperformance metrics, we areable to perform at par with do-mestic outsourcers.

Contrary to the assumptionthat a lot of companies makewhen they outsource their ser-vices elsewhere, you do nothave to expect a degradationof performance by outsourcingservices to this country. Thisfact has been an eye-openerfor a lot of companies.

Over the years, we have cor-rected misperceptions andmade companies aware thatthe Philippine BPO industryhas the capabilities to handlethings beyond basic CSR. Wehave broken the mold in termsof what people perceive thisindustry is capable of doing.

‘We have corrected misconceptions of BPO’Jared Morrison of Stream Global Services highlights the advantages of outsourcing customer care operations to the Philippines

‘IF YOU TAKE CAREOF THE PEOPLE WHOWORK FOR YOU,THEY WILL IN TURNTRUST YOU AND DOA GOOD JOB FORYOUR CLIENTS’

‘WE HAVEPARTNERSHIPS WITHMORE THAN 12UNIVERSITIES HERE’

‘WE HAVE BROKENTHE MOLD IN TERMSOF WHAT PEOPLEPERCEIVE THISINDUSTRY IS CAPABLEOF DOING’

JARED MORRISONVice President and Country Manager ofStream Global Services in thePhilippines




There is an estimated 1$ trilliondollars’ worth of natural re-sources in the Philippines. Infact, the country’s land is con-sidered the world’s fifth richest,with the planet’s largest nickel,third largest gold, and fifth largestcopper reserves. The 1970s and80s witnessed a boom in themining sector, but tightened reg-ulations – especially in terms ofworking with Local Govern-ment Units (LGUs) – put an endto the sector’s contribution of20% to national GDP.

President Aquino’s adminis-tration has targeted mining asone of the eight key sectors ofgrowth and is putting real re-forms into place to get the sec-tor off the ground and runningonce again.

A new mining law has been

established, winning back in-vestor confidence and allowing100% foreign owned companiesto operate in the Philippines.Passed in 1995, the law wentthrough an adjudication peri-od. Ramon Paje, Secretary of theDepartment of Environmentand Natural Resources (DENR),says, “Now we have one of thestrongest laws in the region be-cause the law was adjudicated for10 years, not only by the Con-gress but also by the Judiciary.That is why we can guaranteethat investments in mining willbe protected.”

“This is the only sector in thecountry where foreigners are al-lowed to own 100% of the op-erations,” he adds.

With the wealth of mineralresources coupled with today’s

favorable market prices, a grow-ing number of investors are seek-ing out available mining claimsin the archipelago. The DENR’scorporate arm is the PhilippineMining Development Corpo-

ration (PMDC), and besides ex-ploring, mining, smelting, pro-ducing and exporting, amongother tasks, the PMDC also pro-motes mines for development.

“Our goal is to go for a PPP to

develop the mines and speed upthe administration of the claims,”explains Lito Mondragon, pres-ident and CEO of PMDC. “At themoment we have about 23 on-going works on the mines andwe still have upwards of 20 thatneed to be developed.”

Chinese companies have beenthe most responsive so far. PhilipRomualdez, president of theChamber of Mines of the Philip-pines, says, “I think U.S. interestin the Philippines has changed.The mining companies in theU.S. are generally more inter-ested in going to Canada andEurope and even Latin Ameri-ca. It’s therefore a challenge tobring American mining com-panies over here.”

Because Philippine mines arein such demand, a governmentpolicy of ‘use it or lose it’ is pre-venting claims from sitting idle.After a stipulated amount of timeand three notices, claims are for-feited and passed to the PMDC.

Another point on which thegovernment will not budge isin environmental and commu-nity protection. “Even as wemove towards developing ournatural resources, we have toprotect our environment andmake sure that we use our re-sources sustainably. We alwaysbelieve that environmental se-curity is the ultimate securityneeded to protect our resourcesand our people,” says Mr. Paje.

According to Mr. Mondragon,part of the PMDC contracts re-quire mining companies to sub-mit their development andenvironmental plans from thestart, as well as quarterly reports.

The LGUs still have a voicein deciding whether a miningproject is beneficial for the lo-cal communities, yet the gov-ernment has the final say. Theprocess, albeit tedious, ulti-mately guarantees a green lightfor the project, and investmentsecurity and sustainability.

The government prioritizes the environment over the extraction of resources

Sustainable extraction of $1 trillion in natural resourcesThe world’s fifth richest country in mineral resources, thePhilippine mining sector is back on course after a nearly30-year slump and the government is taking sustainabledevelopment and investment protection seriously

The president and COO ofPhilex Mining Corporation seeshelping people to be a top pri-ority, connecting the industrywith community development.

Philex prides itself on its cor-porate social responsibility(CSR) practices, with initiativessuch as building schools, hos-pitals, and free healthcare.Philex even donated a powerline so that children in sur-rounding communities couldstudy with incandescent lampsinstead of gas lamps, and pro-vided a water and storage pumpfor irrigating crops. Mr. Vil-laluna believes the mining in-dustry to be an integral part ofthe Philippine economy and inthis Q&A, he reflects on therole of mining in the Philip-

pines, what makes Philex a suc-cessful business, and his visionfor future expansion.

HHooww ddoo yyoouu tthhiinnkk tthhee mmiinniinnggsseeccttoorr iiss ggooiinngg ttoo ccoonnttrriibbuuttee ttootthhee nnaattiioonn bbyy iimmpprroovviinngg iittssccoommppeettiittiivveenneessss iinn tteerrmmss ooffttrraaddee??

It has been reported that thepotential mineral resources ofthe Philippines is worth $800billion. This amount, if tappedand realized in terms of thecountry’s revenue, is largeenough to pay for the country’sforeign debt and provide theforeign exchange component ofinfrastructure projects that willsupport economic growth.

The mining industry has beena major export earner since 40

years ago. Our revenues dependon world commodity prices, butwe remain competitive becauseof low operating cost. Improv-ing on this competitivenesswould mean more mines thatcould operate profitably. Andmore mines would mean moreeconomic activities, not onlyfrom the mining operations bythemselves but from the relat-ed businesses and satellite ac-tivities as well. All of these couldgenerate more revenues for thecountry that could contribute toits economic, as well as social,uplift.

AAlltthhoouugghh ggoolldd aanndd ccooppppeerr iissyyoouurr pprriimmaarryy bbuussiinneessss,, PPhhiilleexxMMiinniinngg aallssoo hhaass ootthheerr ssuubb--ssiiddiiaarriieess..

Yes. Our corporate structureis basically in two main areas:mining and energy. The min-ing side is under the parentcompany. The energy side isunder a wholly owned sub-sidiary, Philex Petroleum Cor-poration, whose investments

include a natural gas depositin Palawan and coal in Zam-boanga, Sibugay.

HHooww iimmppoorrttaanntt aarree CCSSRR iinnii--ttiiaattiivveess ttoo PPhhiilleexx MMiinniinngg??

CSR is indeed important toany mining venture. Realizingthis, before we start explorationon a mineralized area, we haveto build goodwill with the com-munity by reaching out and bybeing clear on what we plan todo on the ground. We have tomanage the perception and ex-pectation of stakeholders, tobalance the windfall mentali-ty. Stakeholders are not merebeneficiaries of a future min-ing operation but partners inprogress.

HHooww ddoo yyoouu sseeee tthhee ccoommppaannyyeexxppaannddiinngg oovveerr tthhee nneexxtt ffiivveeyyeeaarrss??

I see the company achievingits aim for growth. We are rightnow preparing for the eventu-al development of the SilanganProject over five years. We arealso in the debugging stage ofour coal operations. We con-tinue to explore for additionalore reserves in the Bulawangold property in Negros Occi-dental and perhaps, if we arelucky, this could justify the re-opening of the mine for oper-ations.

The exploration in the areasaround the vicinity of our Pad-cal mine could hopefully addmore sources of ore for the Pad-cal mine. Over this time, weaim to have at least another op-erating mine in addition to Padcal. Should and when thishappens, we would have no lessthan two mines generatingearnings for the company.

Honesty and concern for the people really distinguish Jose Ernesto Villaluna,president and chief operating officer of Philex Mining, and the way he does business

Building the community and striking gold

ERNESTO VILLALUNAPresident and COO of Philex Mining



THE PHILIPPINES


One of the oldest and most im-portant mining companies inthe Philippines, Nickel Asia Corporation (NAC) is also ahomegrown company. Its firstsubsidiary started operating in1975, and NAC now owns amajority share in four miningoperations throughout thecountry (one in Palawan andthree in Mindanao). It also hasan equity interest in a nickelprocessing plant in operationsince 2005 and a second plantnow under construction.

“We are the largest lateritenickel ore producer and we ac-count for over half of the coun-try’s nickel ore exports. We’vebeen around for a long timeand we’re a local company, andthat gives us some advantages,”says Gerard Brimo, presidentand CEO of NAC. “Most Fil-ipino mining companies areinvolved in copper and goldbut we’re a pioneer in the nick-

el sector so we had the pick ofthe good properties early on,which is not to say that thereare none left because there are.”

NAC took an equity inter-est in the country’s first nick-el processing plant built bymajority owner SumitomoMetal Mining: Coral Bay

HPAL, considered the bestplant of its kind in the world.Due to Coral Bay’s success,NAC has once again partneredwith Sumitomo to build a sec-ond processing plant, whichalso happens to represent thesingle largest investment in thePhilippines’ mineral resourcesector to date.

“We’re working on a secondprocessing plant, which is quitea feather on the cap of thisgroup. There are only a hand-ful of these plants around theworld and two of them will bewith us,” comments Mr. Brimo.

The plant is due to be com-pleted in 2013 and once onstream, NAC will be able toprocess the low-grade nickelore it has been stockpiling andimprove its sales volume sub-stantially.

Although its core business islateritic nickel ore, Mr. Brimosays NAC intends to diversify

into gold and copper, two min-erals found in abundance inthe Philippines. This plan is al-ready underway: in 2010, NACbought a company from AngloAmerican that had four excel-lent claims for exploration. “Idid a joint venture with themwhen I was at Philex so whenthey wanted to sell we werethe only Philippine companythey approached, the otherswere foreign companies, andwe were able to pick it up at areasonable price,” he says.

NAC’s main export marketsare China and Japan. Its clientsinclude the largest stainlesssteel producer in China andthe largest ferronickel producerin Japan. “We have very goodrelations in those countries andwe’re the preferred customerbecause we have a variety ofnickel ore and we deliver onspecs and on time,” explainsMr. Brimo.

In nickel mining, a great dealof low-grade nickel ore (calledlaterite) is also extracted in theprocess. Considered minewaste by many due to the com-plicated process of separatingthe nickel and iron from therest, some companies are infact specialized in this and havemade it big business. One suchcompany is Coral Bay NickelCorporation (CBNC), a sub-sidiary of Sumitomo MetalMining (SMM) Company ofJapan. CBNC partners with RioTuba Nickel Mining Corpora-tion (RTNMC), a subsidiary ofNickel Asia Corporation(NAC), the Philippines’ largestnickel mining company.

“Through our process knownas HPAL, or high-pressure acidleach, low grade nickel ore or la-terite of RTNMC is utilized toproduce nickel/cobalt mixedsulphide that is refined in Japanand used as a component forstainless steel,” explains TakanoriFujimura, president of CBNC.“So, through our process, awaste material like laterite hasbeen given a ‘second lease on life’to be valuable and useful all overagain.”

CBNC is Sumitomo’s firstproject in the Philippines, andit’s made quite a splash. TheHPAL facility has been in op-eration since 2005 and is stillgoing strong, as opposed to thefates of other HPAL plantsworldwide, many of which havealready closed or suspendedoperations.

“Operating an HPAL plantmay be difficult but we’re hap-py that we’re able to attain ourtargets not only because of oursuperior technology, but alsobecause of having world-classFilipino workers,” boasts Mr.Fujimura.

CBNC produces some24,000 metric tons (mt) of nick-el annually at its facility in thesouthern part of Palawanprovince. Thanks to Coral Bay’stremendous success, Sumito-mo has decided to build a sec-ond plant, this one adjacent tothe Taganito Nickel Mine (aproject of NAC) in the north-east region of Mindanao Island.With a price tag of $1.3 billion,the Taganito HPAL plant, orTHPAL, will be the largest sin-gle investment in the Philip-pine mining sector.

Once commercial oper-ations begin in mid-2013, THPAL is forecast to produce30,000mt annually. CBNC and THPAL’s combined an-nual production of 54,000mtwill represent 54% of Sumito-mo’s middle-term strategy toproduce 100,000mt of nickel.

According to Mr. Fujimura, this will ultimately turn Sum-itomo into one of the world’sbiggest nickel producers.

CBNC benefits from itsmother company’s 400-yearlong history in mining. Sumitomo Metals can trace itsroots back to the late 1500swhen the original Mr. Sumito-mo’s brother-in-law learnedWestern methods of copper re-fining. Over the centuries, thecompany also refined its busi-ness, technologies and opera-tions, becoming a pioneer inecology and community care.

“CSR and environmentalprotection is nothing new toSMM. Unlike other companies,we have our own strict CSRand environmental programswithin our company,” com-ments Mr. Fujimura. “In thecase of CBNC, together withour local partner RTNMC, wehave a Social Development andManagement Program. Thisembodies our social commit-ment to the local communities,that include 11 barangays and24 indigenous cultural com-munities.”

He adds that regarding em-ployment, CBNC’s “thrust is toseek first in the locale for high-ly qualified people beforesearching outside the area.”

Coral Bay also pays special at-tention to its safety and envi-ronmental controls in order toprevent the underground infil-tration of acidic liquids and therelease of harmful gases intothe air. The company’s strictregulations also protect the pre-cious coral reefs along Min-danao’s coast.

World-classprocesses at Coral BaySumitomo and NickelAsia’s Coral Bay NickelCorp. is putting minewaste to good use

Nickel, a highly sought aftercommodity

GERARD H. BRIMOPresident and CEO of Nickel AsiaCorporation

TAKANORI FUJIMURAPresident of Coral Bay NickelCorporation

The Coral Bay processing plant near NAC's Rio Tuba mine in Palawan

CGA Mining Limited togeth-er with Filminera ResourcesCorporation is operating theMasbate Gold Project, thelargest operating gold project in

the Philippines. The operationalsuccess of the project is attrib-uted to its dedication to CSR,becoming an investment suc-cess story others should follow.

“We are focused on health,livelihood, and education inthe communities where weoperate,” says Cris G. Acosta,president of Filminera.

“What is good about Filmin-era is that though still a work-in-progress, it has alreadyshown that you can have aworld-class mining project inthe Philippines,” he adds.

President Benigno Aquinohas been supportive of themining sector and Mr. Acos-ta stresses that the govern-ment has to ensure continuingsupport of current investorswhile encouraging new ones.

“We have not had much newmining activity, so we needtechnology and investmentsright now,” he says. “I thinkthere are lots of opportunitieshere. If CGA Mining Limitedwas able to do it, then otherforeign companies and in-vestors can as well.”

With a forecasted $13.5 bil-lion coming in, the miningsector in the Philippines isgrowing. Filminera is takingmeasures to include the sur-

rounding communities in thegrowing process. “Before wedo any social project, we makesure that the community ownsthe project and that it wantsthe project to take place. Wedo not want to impose anyproject on the community.”

Mining creates a lot of in-frastructure, which benefitsthe community as Filmineraaims to improve its sur-roundings while expanding itsreach. “One of our objectiveshas always been to ensure thatwe protect the environmentand the safety of the people inthe communities we work in,and that we also share what-ever profits or benefits wehave with the communityaround us.”

Filminera and CGA Mining Ltd. attribute their mining achievement to their investment in the community

FILMINERA

Investment success

Filminera’s Masbate Gold Project has total resources of approximately 7.7m ounces

THANKS TO THECORAL BAY HPAL FACILITIES, LATERITE ISGIVEN A ‘SECONDLEASE ON LIFE’ ANDCONVERTED INTO AUSEFUL MATERIAL

THE UPCOMING $1.3BILLION HPAL PLANTAT TAGANITO REPRE-SENTS THE LARGESTSINGLE INVESTMENTIN THE PHILIPPINEMINING SECTOR

Located on the southernPhilippine island of Mindanaoin the municipality of Tam-pakan, is one of the world’slargest undeveloped copper-gold deposits.

Sagittarius Mines, Inc. (SMI)holds a Financial and Techni-cal Assistance Agreement(FTAA) with the Philippinegovernment to explore, devel-op and operate the Tampakanmine. If the project is approvedit has the potential to becomethe largest mine in the coun-try and the fifth largest cop-per mine in the world.

The Tampakan Copper-Gold Project would be a sig-nificant source of revenue andemployment.

Mark Williams, SMI gener-al manager for Operations andExternal Relations, estimatesthe project could generate, on average, Php134 billion($2.8billion) to Philippine GDPeach year over the 20-year con-struction and operation phas-es. This is equivalent to anadditional annual increase of1% to Philippine GDP.

“The project has the po-tential to create opportunitiesfor approximately 10,000 jobsat the peak of constructionand more than 2,000 directjobs when the mine com-mences operation. Engage-ment of local contractors andservice providers will gener-ate further substantial em-

ployment within the Philip-pines,” he says.

SMI’s investment goes be-yond the Tampakan mine associal development programsprovide support for infra-structure development, accessto education and health facil-ities and services, safeguard-ing of cultural values,institutional capacity building,and enterprise development.

“If approved, this projectwould be a blueprint for eth-ical modern mineral develop-ment in the Philippines,including best-practices in re-settlement programs, indige-nous consultation, andenvironmental and social im-pact assessments, and providean opportunity for sustainableeconomic development,” saysMr. Williams.

Under Xstrata Copper, SMI is sustainably developingone of the world’s largest copper-gold mines

SAGITTARIUS MINING INC.

More than a miningcompany




Energy is a vital component ofevery country’s economy, andreducing dependence on for-eign energy sources is an im-portant goal for manygovernments. The Philippineshas made great strides in thisarea in the past three decades,and is moving forward with sev-eral projects that will furtherreduce the need to import en-ergy.

As a country with relativelysmall proven oil reserves andlow oil production, the Philip-pines is forced to seek sourcesof energy from other areas. Theinauguration of the Malampayanatural gas field in 2001 helpedmove the country towards aless expensive and more do-mestic energy supply profile.

Through investments in lo-cal energy infrastructure, thePhilippines has managed toslash its dependence on foreignenergy sources from 92% in1973 to 40% now. That figurewill fall even more in the nearfuture, as some ambitious pro-jects begin producing evenmore energy locally.

Some of the projects will usefossil fuels, such as natural gas,

to increase domestic energyproduction. Nevertheless, thecountry’s long-term goal is to fo-cus more and more on renew-able sources to increase localenergy production, as the tech-nology becomes more ad-vanced and less expensive.

“Through technology andmass production, renewableenergy is going to become a re-ality,” says Antonio Cailao, pres-ident and CEO of the PhilippineNational Oil Company, orPNOC. “I am very much in lovewith solar energy becauseamong all the sources of re-newable energy, it is the only re-newable energy which is notsite-specific. The sun is inSpain, the sun is in Germany,the sun is the same everywhere,and so that is why it is not site-specific.”

The government has passedlegislation in recent years tohelp spur the development ofrenewable energy. One was theRenewable Energy Law, whichidentifies major sources ofemerging energy, such as geot-hermal, hydro, solar, wind,ocean and biomass. Solar is aparticularly interesting area, as

the country has abundant sunand an industrial base capableof producing the semi-con-ductors and other componentsneeded to build solar farms.

The government’s goal is forthe country to get 40% of itsprimary energy requirementsfrom renewable sources by theend of 2013. That objective isvery achievable, after getting ashigh as 35% in recent years withgood amounts of rain to pow-er hydroelectric generation.

The country already has avery important source of re-newable energy, from geother-mal generating plants. About27% of electricity generated inthe Philippines comes from

these plants, which use heatfrom deep in the earth to gen-erate steam and turn turbines,making it the biggest user ofwet-steam geothermal tech-nology, and the second-biggestproducer on the planet of elec-tricity using geothermal ener-gy, after the U.S.

At the Energy Investment Fo-rum last December held inMakati City, Secretary of EnergyRene Almendras stated con-cerning renewable energies, theDepartment of Energy (DoE)“will take the lead, will push andwill make sure that things willhappen.” To everyone workingin the field of renewables, theDoE promises the highly an-

ticipated opportunities willsoon materialize.

Renewable energy will in thelong term be able to supply muchof the country’s power needs,but in the shorter and mediumterm the Philippines has plansto use its natural gas resourcesto make its power sector moreefficient, less expensive, and lessdependent on foreign fuels.

“The vision I believe in is thatrenewable energy will reach par-ity and advance periodicallycompared with fossil fuels,” saysMr. Cailao. “The plan the De-partment of Energy has is tolaunch the gasification of thePhilippines, which will be theintermediate step/fuel beforewe move to renewable energy.”

The country currently has onefunctioning gas field, calledMalampaya. The field is locat-ed about 310 miles west of Lu-zon Island and has estimatedreserves of as many as 3.7 tril-lion cubic feet of natural gas, and85 million barrels of conden-sate. The field supplies three gen-erating stations that betweenthem provide 2,700 megawattsof electricity for the island, outof 7,600 megawatts of total gen-erating capacity on Luzon.

The lack of a gas pipeline net-work greatly limits the use of theindigenous gas, but the govern-

ment is planning to invest in thekind of infrastructure neededto supply gas to much of thecountry. The first step of the planwill be building the Batangas-Manila pipeline, known as theBatMan project.

“This pipeline will go into theheart of Manila to service theindustrial, commercial, trans-port and retail sectors, and thegenerating plants,” explains Mr.Cailao. “Can you imagine low-ering the cost of fuel by over 50%by having gas? It is a big boostto the economy, and that is alsoincome for the foreign investorswho would like to come in.”

The addition of a pipeline net-work will reduce the need for for-eign energy by another threepercentage points, Mr. Cailaoestimates. Using more gas willhave other benefits as well. Nat-ural gas burns more cleanly thanoil, producing less greenhousegases. Natural gas is also cheap-er than fuels such as diesel.

Even as gas pipelines are ex-tended around the country, theFilipino government and privatebusinesses will continue to in-vest in cheaper and more effi-cient renewable energy, with thegoal of eventually cutting theneed for energy imports to abare minimum, a goal countriesaround the world should share.

The government, local com-panies and foreign companieshave ambitious investmentplans to meet the Philippines’growing energy needs, througha combination of fossil fuel andrenewable energy sources.

Enfinity is one such compa-ny. It was founded in 2005 inBelgium, and its core businessis developing, building, financ-ing and managing renewableenergy projects, especially so-lar and wind projects. One ex-ample is providing solar energyto remote areas using solar pan-els, a small investment that cancontribute to a big improve-ment in local living conditions.

“In some areas, a simple lightbulb could change the wholeculture of the village and theirlifestyles, so they can study atnight,” says Dennis Ibarra, pres-

ident of Enfinity Philippines Re-newable Resources Inc. “In thefuture, with a couple of solarpanels they can have fridgesand freezers.”

A local company that’s mak-ing a difference is Aboitiz Pow-er, which is specialized inhydroelectric projects. Thecompany recently finished twonew hydro plants on the islandof Mindanao that were inau-gurated by President BenignoAquino and will contribute 42.5megawatts of capacity on theisland.

“We have an advantage be-cause we have an organizationon the ground,” says MiguelAboitiz, senior vice presidentof Power Marketing and Trad-ing for Aboitiz Power. “We havethe technicians and the financepeople etc. here already, where-

as a foreign investor has to bringthem in or hire them and startfrom scratch.”

Of course, big multination-als have other advantages, suchas enormous financial re-sources and the ability to cre-ate thousands of jobs with justone project. Shell Oil has a stakein the Malampaya natural gasfield project, and has other em-ployment-generating opera-tions in the country as well.

“The biggest shared globalservice center of Shell is here inManila and it is a hugely suc-cessful operation,” says EdgarChua, chairman of Shell's Fil-ipino business. “We havearound five or six globally witharound 7,000 employees andwe have 3,000 here in the Philip-pines, which shows the signif-icance of the operations here.”

The Philippines’ energy mixThe Philippines has a growing population and a growing economy, both of which willincrease demand for energy in coming years

Powering the Philippines requires taking greater advantageof the nation’s renewable sources, including geothermal andsolar, and using cleaner burning fossil fuels like natural gas

Abundant renewable energy sources

ANTONIO CAILAO,President and CEO of PNOC

RENE ALMENDRASSecretary of Energy

The Philippine government recently passed the Renewable Energy Law in an effort to help spur the development of renewable energy sources



THE PHILIPPINES

Those without private healthinsurance, of course, rely onstate-funded hospitals andhealth centers, which are the tar-get of the Aquino administra-tion’s reforms to ensure universalhealthcare. There is, however,another important segment be-tween the poorest and wealth-iest, covered by healthmaintenance organizations(HMOs), such as IntelliCare, thelargest Philippine HMO.

“We provide programs andinnovative products and ser-vices to improve the deliveryfor healthcare services for thosewho can pay a portion for them-selves,” explains Mario M. Silos,president of IntelliCare. “Wecannot focus on those on thepoverty line; this is the govern-ment’s function.”

Mr. Silos says that while In-telliCare supports the govern-ment in its move towardsmicro-insurance, especiallywithin the poor rural areas, it isalso a partner of the private sec-tor’s CSR projects. “We reallyneed to focus on this as in the

long run it not only expands ourmarket, but it also temporarilyallows us to focus our expertiseon areas that can use our help,”he comments. “We’re a mem-ber of the Philippines Businessfor Social Progress and a lot ofcorporations are very happy tosupport different projects.”

Established in 1995, Intelli-Care today has more than

600,000 members and a net-work of more than 12,000 physi-cians and medical specialists,nearly 800 reputable hospitals,clinics, diagnostic centers andother first-class medical insti-tutions.

The sheer size of the HMOhas given its members an econ-omy-of-scale advantage, even inthe more remote areas. “In theold system people were tooafraid to go to their providers,as they could not afford it. Thelaw of large numbers allows usto maintain a structure that per-mits patients to access these fa-cilities. We provide support tothe providers and allow sus-tainability but we also allow thepopulation to access this andprovide them with betterhealth,” says Mr. Silos.

“Our members must have access to providers and we’vemade sure we blanket themwith an extensive network thatallows them to use their IntelliCare card wherever andwhenever they need it,” addsthe leading HMO’s president.


With over 7,000 islands com-prising the Philippine archi-pelago, extending healthcareservices to all citizens can bequite challenging. Many Fil-ipinos have traditionally beenneglected in the national health-care system, which althoughconsidered of a good standard,simply lacks the resources toreach the more remote, andpoorer, areas.

“Unfortunately, a large part ofthe population is living in ex-treme poverty, even as far ashealthcare is concerned. On anational scale we have trainedmany nurses and we have doc-tors, but not in all areas. Thislack of healthcare workers andfacilities must be changed,” ex-plains Secretary of Health Dr.Enrique T. Ona. “We need toimprove our rural healthcareunits, equipping them with thenecessary manpower, nursesand midwives.”

Currently, the Departmentof Health (DOH) has 72 largerhospitals and around 2,000smaller ones, which are com-plemented by an excellent private healthcare network. Fil-ipino doctors and nurses are

graduates from the top univer-sities in the Philippines, andmany have also acquired fur-ther credentials and training inthe U.S.

As a result, the staff in bothpublic and private health cen-ters is highly educated, withsome of the best doctors serv-ing in the state hospitals. Themajor difference between thetwo comes down to the quali-ty of facilities and technologiesoffered.

For those who do have health

insurance, the healthcare sys-tem is “first class”, says Dr. Ona.Patients can find world-classquality healthcare at places suchas MPIC’s nationwide networkof premier hospitals, and atAsian Hospital and MedicalCenter, in the southern Luzoncorridor of Metro Manila. In-deed, Asian Hospital is con-sidered one of the best privatehospitals in all of Asia.

As for insurance companies,the Philippines is home to var-ious regional and global indus-try leaders. Sun Life FinancialPhilippines, part of the Cana-dian Sun Life Financial group,offers Sun First Aid, an afford-able hospital income plan thatoffers benefits such as daily cashbenefits during hospital con-finement, which ultimately helpdefray the cost of hospitaliza-tion. The Philippine AmericanLife and General InsuranceCompany (Philam Life) formspart of the over 90-year old pan-Asian AIA Group. Its Health100 is the Philippines’ firsthealth insurance product thatprovides a comprehensiverange of living benefits up tothe age of 100.

Extending top-rated medical servicesto all corners and classes Private healthcare providers, public clinics and HMOs work towards the common goal of reaching all Filipinos nationwide

A large number of medical professionals practicing in the Philippines receive their training abroad, especially in the U.S.

MARIO M. SILOS,President of Intellicare

ASIAN HOSPITAL AND MEDICAL CENTER

The luxury of hi-tech healthcare

Walk into Asian Hospital andMedical Center today and itmay seem more like a luxu-rious hotel than your idea ofa Filipino hospital. It is thefirst major private hospitalwith tertiary care facilities inthe southern Luzon corridorof metropolitan Manila andis the recognized leader ofinnovative, patient-centeredhealthcare services.

The high-tech medicalcenter stands on 17,250

square meters of property.Over 900 employees and 160outsourced staff, many ofwhom were educated abroad,tend to the 217-bed capaci-ty medical center.

State-of-the-art technolo-gy, touch screens, and voiceactivated systems put AsianHospital at the forefront ofthe growing medical indus-try in Asia. Theo Seiler, CEOat Asian Hospital and Med-ical Center, believes that apatient-centered approach,innovation and affordabilityare key factors leading thedevelopment of medicaltourism in the country.

Asian Hospital maintainsquality services by increas-ing the knowledge base of itsstaff, continuing training asthey begin work. “Our targetis to provide opportunities

and identify people with highpotential.” says Mr. Seiler.

He also presses that hedoes not regard its doctors ascustomers, but as partners. “Isee the strength in the part-nership and the very best waythat can benefit the patientin terms of patient safety, ser-vices, and patient satisfac-tion,” he says.

In order to reach the de-mand of regional and inter-national patients, Mr. Seileremphasizes high-class facil-ities and services that AsianHospital offers. “The chal-lenge is to change the per-ception out there that thePhilippines is not a safe placeand reassure people thatsome of our hospitals areeven of perhaps a higherstandard than they can findin their own countries.”

Innovative and world-class healthcarefrom a patient-centeredapproach comes with thelatest in technology andimpressive surroundings

The Philippines has now become the thirdlargest provider of overseas workers in theworld. The number of overseas Filipino work-ers has grown by 52% in just five years fromaround 900,000 in 2004 to 1.4 million in2009. Currently, there are around 3,900 Fil-ipinos leaving daily for better employmentopportunities in foreign countries.

OFWs primarily work abroad to be ableto earn more so that they can provide abrighter future for their families. They dreamof buying a new house and lot, starting theirown business and sending their children tocollege. However, despite the higher incomethey still find it hard to save because mostof their income is spent on the family’s ba-sic necessities such as food, medical expensesand household bills. Some OFWs even comeback to the Philippines with hardly adequatesavings for a retirement fund.

Philam Life, the country’s number one lifeinsurance company, understands the needsand burdens of today’s OFW. Thus, to helpOFWs save easily and prepare for their fam-ily’s future, Philam Life introduces its “Ba-likbayani Pasalubong Package”. Philam Lifecontinues to develop financial solutions thatwill help OFWs give their families a moremeaningful pasalubong than a BalikbayanBox – a bright future for their family.

Philam Life’s “Balikbayani PasalubongPackage” is a comprehensive financial planfor OFWs that offers the following financialsolutions:•• PPrrootteeccttiioonn Vanguard 100, a customizable life insuranceplan, provides life protection that will giveOFWs peace of mind that their family willbe secured in case of unforeseen circum-stances.•• SSaavviinnggss Build and Protect, a savings and life insur-ance plan-in-one, provides guaranteed cashbenefits after 15 years that will help OFWssave up for their dream house, dream busi-ness or dream vacation. •• EEdduuccaattiioonn Bright Future Plus, an education and life in-surance plan-in-one, provides a guaranteededucation fund that will help OFWs givetheir children a bright future. •• RReettiirreemmeenntt Leisure, a retirement and life insurance plan-in-one, provides monthly income paymentswhen an OFW reaches age 50, 55, 60 or 65that will help OFWs live a comfortable re-tirement.•• IInnvveessttmmeenntt Money Tree, an investment and life insur-ance plan-in-one, will help OFWs grow theirmoney through Philam Life’s investmentfunds.•• HHeeaalltthh Health 100, a health and life insurance plan-in-one, provides OFWs with a health fundthat they can use in case of sickness or acci-dents, plus cash benefits when an OFWreaches age 80 and 100.

With Philam Life’s Balikbayani PasalubongPackage, OFWs can bring home the most im-portant pasalubong for their family - a brightand prosperous future.

Ikaw, anong plano mo? Usap Tayo. Con-tact your Philam Life Financial Planner toknow more about the “BalikbayaniPasalubong Package” or call our customerhotline at (02) 528-2000.

AABBOOUUTT PPHHIILLAAMM LLIIFFEE The Philippine American Life and GeneralInsurance Company (“Philam Life”) is thelargest life insurance company in the Philip-pines and the market leader for over 60 years.Philam Life offers an extensive line of innov-ative products that provides solutions to var-ious financial needs including incomeprotection, retirement, education, investment,health, personal accident, group life and cred-it life. Philam Life has the most extensive net-work of offices and sales agencies nationwide.

Philam Life is a member of the AIA GroupLimited (AIA), the largest, independent list-ed pan-Asian life insurance group in the world.

AABBOOUUTT TTHHEE AAIIAA GGRROOUUPP AIA Group Limited and its subsidiaries (col-lectively “the AIA Group” or “the Group”)comprise the largest independent publicly list-ed pan-Asian life insurance group in the world.It has wholly-owned main operating sub-sidiaries or branches in 14 markets in AsiaPacific – Hong Kong, Thailand, Singapore,Malaysia, China, Korea, the Philippines, Aus-tralia, Indonesia, Taiwan, Vietnam, NewZealand, Macau and Brunei and a 26% jointventure shareholding in India.

The group traces its origins in Asia backmore than 90 years. It is a market leader in theAsia Pacific region (ex Japan) based on life in-surance premiums and holds leading posi-tions across the majority of its markets. It hastotal assets of $107.9 billion (as at 30th No-vember 2010).

The AIA Group meets the savings and pro-tection needs of individuals by offering a com-prehensive suite of products and servicesincluding retirement planning, life insuranceand accident and health insurance. The groupalso provides employee benefits, credit lifeand pension services to corporate clients.Through an extensive network of more than260,000 agents and over 21,000 employeesacross Asia Pacific, AIA serves the holders ofover 23 million individual policies and over10 million participating members of grouppolicies.

AIA Group Limited is listed on the MainBoard of The Stock Exchange of Hong KongLimited under the stock code ‘1299’.

The 48-storey Philam Life Tower in Makati is one of the tallestand most technologically advanced buildings in the country

INTELLICARE IS THELEADING HMO,OFFERINGAFFORDABLEHEALTHCARE TO ITS600,000 MEMBERS

COMPANIES, SUCH ASPHILAM LIFE AND SUNLIFE FINANCIALPROVIDE EXCELLENTHEALTH INSURANCEPLANS, WHILE ASIANHOSPITAL ANDMEDICAL CENTERRENDERS WORLD-CLASS HEALTHCARESERVICES ANDFACILITIES

Bring home more than just a Balikbayan Box, with Philam Life’s “BalikbayaniPasalubong Package”




The benefits of streamlinedprocedures are already be-coming visible in the health in-surance and pension sectors,with the powerful state-ownedSocial Security System (SSS)leading the way in preparingto meet Millennium Develop-ment Goals (MDGs) set by thenew administration. The SSS,which provides insurance pro-tection to workers in the pri-vate sector against sickness,disability, maternity, death andold age, is undergoing a majorreform with a view to extend-ing the life of the fund to per-petuity.

As Emilio S. de Quiros Jr., president and CEO of SSS,points out, “The challenge wecurrently face is putting togeth-er a structure for the SSS that willcontinue to be around even af-ter we have left the institution.Under current estimates thefund is expected to last until2039, but our ultimate objectiveis to extend it to perpetuity.”

And Mr. de Quiros confirmsthat this cannot be achievedwithout pushing for increasesin the contribution rate, whichis currently one of the lowestin Asia. “Right now it is 10.4%,”he says, “This compares unfa-vorably with Asia, which has anaverage contribution rate ofaround 23%, and Europe withabout 35%.”

The challenge is significantsince it requires a drasticchange in public opinion,namely: persuading employersand employees alike that in-creased contributions are aninvestment in their future. The

SSS president is clear aboutmembers’ responsibilities inthis regard.

“Some members may harborthe misconception that theysave more if they underpaytheir contributions, but ulti-mately they are denying them-

selves of meaningful SSSbenefits when financial con-tingencies strike them and theirfamilies,” he stresses.

The SSS has also madeprogress in bringing the over-seas Filipino workers (OFW)community on board by mak-ing it easier and more conve-nient to pay via its Flexi-fundprogram and its wide networkof foreign representative of-fices in key locations such asAbu Dhabi, Al-khobar, Sydney,Brunei, Doha, Hong Kong, Jed-dah, Kuwait, London, Milan,Riyadh, Rome, San Francisco,Singapore and Taipei.

As Mr. de Quiros explains,“we are doing two things forthe OFW market. First we areallowing them to become vol-

untary members so that theycan continue paying their con-tributions and avail themselvesof the lifetime pension whenthey retire. At the same time weare increasing the number of bi-lateral agreements with othercountries. This will enable amember who has worked fiveyears in the Philippines and fiveyears in another country toqualify for a pension, for which10 years of contributions arerequired.”

These measures are alreadypaying dividends, with the SSSreporting that its net revenuesurged by 36% in the six monthsto June 2010, mainly due togains in contributions and in-vestments.

Also tasked with meeting

key MDGs is the country’s De-partment of Health (DOH),whose prime objective is to improve the welfare of thepoorer sections of Philippinesociety through universal cov-erage and the provision of ad-equate human resources,health information and health-care facilities. But as Dr. En-rique T. Ona, Secretary ofHealth at the DOH, explains,this is just the first phase. “Thefuture phase is to improve thesupport value. In the Philip-pines health insurance does notcover everything, and we aimto increase the amount it does.”

This will inevitably requireconsiderable levels of invest-ment, which is why the DOHis opening up the country’s 25

major hospitals to private in-volvement via public privatepartnerships (PPPs). “I estimatethat we need something like 40to Php45 billion [$923 millionto $1 billion] to upgrade andmodernize these 25 hospitals,”says the Secretary of Health.“This is where we will be in-terested in big players part-nering with us.”

Another institution with a vi-tal role to play in extending andconsolidating insurance pro-tection in the country is the In-surance Commission (IC).Emmanuel F. Dooc, the insur-ance commissioner, states thatthe regulator’s vision is to pro-vide “an opportunity for everyFilipino to secure insurance pro-tection by 2020.”

The IC has therefore takenproactive measures aimed atboosting consumer and in-vestor confidence in the sector,recently revoking the licensesof two insurance agencies fora string of violations. “We aredetermined to observe prac-tices at par with regional andglobal standards,” Mr. Doocsays.

The commissioner believesthat insurance penetration inthe country could reach asmuch as 20% by the end of thisyear, which in a still develop-ing nation such as the Philip-pines represents genuineprogress, suggesting that thesector is finally tapping intoone of the largest potentialmarkets in Asia.

Extending the protecting arm ofinsuranceNowhere has President Aquino's election-winning pledgeto improve governance been taken more seriously than inthe insurance sector, which is set to become one of thecornerstones of the country’s economy as the averagewealth of Filipinos continues to grow

The SSS plans to diversify its investments and maximize available opportunities under the Aquino administration’s PPP scheme for insfrastructure

THE SOCIAL SECURITYSYSTEM AIMS TOPROLONG THEFUND’S EXPECTEDLIFE SPAN FURTHERTHAN ITS 2039EXPIRATION DATE

CONTRIBUTION TOSOCIAL SECURITYSTANDS AT 10.4%(UNDER HALF THEASIAN AVERAGE), AFIGURE THE SSS PLANSTO RAISE

THE DEPARTMENT OFHEALTH IS WORKINGTO INCREASECOVERAGE OFHEALTH INSURANCESERVICES AMONGTHE POOR

THE INSURANCECOMMISSIONERBELIEVES INSURANCEPENETRATION IN THEPHILIPPINES COULDREACH 20% BY THEEND OF 2011

EMILIO S. DE QUIROS JR.President and CEO of the SSS

The Philippines is recordingextraordinary economic ex-pansion with fast-growingmanufacturing and service in-dustries.

With such a shift has comegreater interest in financingand banking among Filipinos,yet the general public remainslargely unaware of the bene-fits of insurance policies. SunLife Financial Philippines, thenation’s second largest insur-er, prioritizes education of themarket on how to save and se-cure a financial future, creat-ing greater awareness for theinsurance industry and con-tributing to the country’s keyobjective of poverty allevia-tion.

“Insurance companies playa very vital role in terms of help-ing secure the financial futureof the Filipino people,” explainsRizalina Mantaring, CEO andPresident of Sun Life in thePhilippines. “There is no oth-er product that if you pay a pre-mium today and somethinghappens to you tomorrow yourfamily gets the full benefit ofyour policy.”

“All other financial productsbuild value over time, but a lotof people don’t know this. Thisis why we embarked upon ourfinancial literacy campaign in2009. Studies were showingthat if you ask people whichinvestment offers the best re-turns over the long term, thenumber one answer was sav-ings accounts. But in the Philip-pines, the interest rate onsavings is only about 1%. It willnot beat inflation; it is not aninvestment. We really need tobuild financial literacy. Verylow insurance penetration canbe traced back to that.”

At just 14%, insurance pen-etration levels remain ex-tremely low in the Philippines,a market more risk averse thanregional neighbors. Sun Lifestudies found that just 2% of

the population is financially independent at retirement.

In the Philippines, Sun Life’sforte is life insurance, particu-larly in variable universal life(called investment-linked inAsia), accounting for 70% ofsales, as well as a range of mu-tual funds, bonds, balance andequity funds, and savings prod-ucts for education and pen-sions.

“Perhaps as a result of theeconomic downturn in thepast couple of years there hasbeen a desire for some form of

guarantee, either a capitalguarantee or minimum guar-anteed return,” comments Ms.Mantaring.

“But if you are preparing forretirement, it’s worth invest-ing regularly in something likea mutual fund, which is an in-vestment that may be volatilein the short term but over timewill probably give you far bet-ter returns than most of thefixed income instruments,”she says. “The average com-pounded return for a mutualfund including the downturnis probably around 17% an-nually. Over time, your re-tirement is protected.”

For overseas Filipino work-ers (OFWs) who plan to retireto their motherland eventual-ly, Ms. Mantaring says there is

value in getting an insuranceplan or investment productfrom Sun Life Philippines: themoney would then be avail-able in pesos for the insuredperson’s family in the Philip-pines or for the insured upontheir return. However, due toregulations in the Philippines,interested parties must buy andsign for policies while in thearchipelago.

Fortunately, Sun Life Finan-cial Group has a strong globalpresence in 24 countries to ser-vice OFWs and other Filipinosabroad. Originally establishedin Canada, Sun Life SLF Cana-da is the largest Canadian lifeinsurer based on premiums anddeposits serving individual cus-tomers through protection andwealth solutions and groupclients through group benefitsand retirement solutions. Like-wise, in the U.S., Sun Life is aleading provider of annuities,life insurance and group ben-efits, too. Filipinos living over-seas can expect the same levelof quality in products and ser-vices if they buy from them, butfor those who plan to comehome it’s important also to in-vest in peso instruments.

Since 1895, Sun Life’s sup-port of the community goes be-yond insuring for the future;Sun Life Philippines also part-nered with the Department ofEducation to renovate schoolsand committed over a milliondollars over five years to buildhouses for families in a site withlocal schools, clinics and liveli-hood programs.

“We are woven into the fab-ric of the nation’s history. We’vebeen here through two worldwars and have families that havebeen with us for as much as sev-en generations. It is a bond oftrust that has been built for manyyears and we are part of nationbuilding and will continue to bepartners in nation building,” ob-serves Ms. Mantaring.

116 years growing with andinsuring the Philippines Part of the globally leading Sun Life Financial group, Sun Life Financial Philippinesshows Filipinos that a better, more secure life and retirement is possible

RIZALINA MANTARINGPresident and CEO of Sun LifeFinancial Philippines



THE PHILIPPINES


Philippines’ warm hearts and smiles

What the Philippines is aboutThe U.S. Census Bureau report-ed in 2007 that there were ap-proximately 3.1 million peoplewho are Filipino or part Filipinoliving in the country. Filipinos, es-pecially those who have left theirhomeland in search of a betterlife (overseas Filipino workers orOFWs), and Filipino-Americansliving in the 50 states form sig-nificant populations in Califor-nia, Hawaii, New York, NewJersey, Nevada, Washington,Florida, Virginia and Alaska.They are the second largest eth-nicity among Asian Americans.

Many Americans are familiarwith Filipino food (lumpiais nowsynonymous with the spring rollin many households), the coun-try’s role in World War II, its ris-ing status as an English-speakingoverseas call center, and the factthat it’s an island nation in theSouth Pacific.

But what does the averageAmerican really know about thePhilippines past and present?How many of them list the coun-try among their top internationalvacation destinations? Howmany Americans associate itwith breathtaking landscapes,white sand beaches, hospitablepeople, colorful festivals and ad-venture sports? And what aboutfirst-rate medical services, world-class casinos, and a rich cultur-al and ethnic mixture?

A long history of Westerncolonial rule (namely by Spainand the U.S.) and a steady influxof migrants from China, In-donesia, Malaysia and otherAsian nations come together toform a true blend of cultures,myriad dialects and physicaltraits, and religious diversity. Yetwhat unites all Filipinos is theirwarm hospitality, an aspect im-mediately appreciated upon ar-rival in the country or uponmeeting a Filipino abroad.

The country’s sprawling cap-

ital, Manila is a bayside meltingpot that combines old and mod-ern, gritty and sparkling, greasyand epicurean. Brand new en-tertainment and leisure centers,along with luxurious hotels caterto the discerning traveler, whilebustling streets give a glimpseinto everyday life for the averageManilan or Manileño.

Venturing outside MetroManila, visitors will encounternatural wonders, authentic vil-lages and exciting cities spreadthroughout the Philippines’7,107 islands.

World War II shipwrecks andone of the world’s largest coralreefs teeming with brightly col-ored fish provide a unique back-drop for snorkeling and scubadiving. In Donsol, Sorsogon,snorkelers can even interactwith whale sharks, known asthe ocean’s ‘gentle giants’. Philip-pine fresh and salt waters alsoset the stage for kayaking, sail-ing, fishing, white water rafting,and dolphin watching, just toname a few.

Landlubbers can experiencephenomenal settings for rockclimbing, trekking and moun-tain biking, while Philippine flo-ra and fauna – including thePhilippine tarsier, the smallestprimate in the world, – spectac-ular volcanoes and caves, andcolonial churches and villagescan be enjoyed by the moregrounded. For those who wishto pamper themselves, the char-acteristic Filipino warmth lendsitself ideally to relaxing massagetherapies and also transcends in-to the gastronomy, which goesmiles further than the charac-teristic lumpia. Using freshseafood, marinated meats, tastysauces and a wide variety of fruitsand vegetables, Filipino cuisinealmost invariably puts a fewpounds on unsuspecting travel-ers.

Aside from providing an ex-otic and friendly setting for ad-venture, relaxation, shoppingand playing, the Philippines isalso an ideal destination forhealth tourism. Last year, 200,000medical tourists arrived in thePhilippines, yet given the coun-try’s high quality healthcare sec-tor and affordable prices, thisnumber is but a drop in the buck-et of what it could potentially be.

Secretary of Health, Dr. En-rique T. Ona, is looking to expandthe capacity of the already lu-crative medical tourism indus-try. “We are looking at medicaltourism not just in terms of cos-metic surgery, but also lettingthe world know about the abil-ity of our medical staff to dealwith major illnesses and opera-tions that can be very expensivein some countries. The cost ofhealthcare here is at least 50%cheaper if not more,” he says.

One day, medical tourists tothe Philippines could be con-tributing to improving the livesof the country’s less fortunate.Dr. Ona explains: “We would liketo have a mechanism wherebypart of the funds raised by med-ical tourism will be channeledto assisting the poorer peoplewithin our population.”

The Philippines is improvingits international access througha recently approved open skiespolicy as well as its internal trans-portation network. Although thecountry received just 3 millionvisitors last year, Secretary ofTourism Alberto Lim is opti-mistic that the new governmentadministration’s efforts will payoff in tourist arrival numbers.

“We are ambitious enough topredict that we are going to dou-ble our tourism figures in sixyears. It took us 40 years to gethere, and it’s going to take us sixto get to where we want to be,”he forecasts.

TThhee FFiilliippiinnoo ddiiaassppoorraa iiss tthheenniinntthh llaarrggeesstt iinn tthhee wwoorrlldd ppeerrccaappiittaa,, aanndd iinn tthhee UU..SS.. OOFFWWssccoommpprriissee tthhee ffoouurrtthh llaarrggeesstt rree--mmiittttaannccee mmaarrkkeett.. WWhhaatt iiss yyoouurrmmiinniissttrryy ddooiinngg ttoo eennccoouurraaggeetthheeiirr rreettuurrnn??

Our undersecretary visitedthe U.S. in late 2010 andlaunched the Filipino Home-coming year 2011. We want tobring Filipinos home this yearfor big homecoming events.This year is the 400th anniver-sary of one of the oldest schoolsin the country and the 150th an-niversary of our national hero,Jose Rizal. We wanted to coin-cide the homecoming year withthese events.

In 2012, we also want to do aVisit Philippines year, but weneed to build up to that becausewe lack the infrastructure and weneed a higher standard of prod-ucts, i.e. service delivery. Warmhearts and smiles are thestrengths of the Filipinos but aninternational traveller also ex-pects the food to be delivered tohis or her table hot with the prop-er utensils. These are the stan-dards you can’t take for granted.

We have to develop our prod-uct before we brand it: safety,information, variety, etc. I haveto make people understand thatthe Department of Tourism isnot just a marketing arm oftourism .We have to let touristsknow what they are getting fortheir money.

WWhhaatt ooppppoorrttuunniittiieess aarree aavvaaiill--aabbllee ffoorr iinnvveessttmmeenntt aanndd ccoooopp--eerraattiioonn wwiitthh rreeggaarrddss ttoo ttoouurriissmm??

There are a number of in-vestments for infrastructureprojects including airports inour priority destinations in thecenter of the Philippines. Oneof them is Bohol, which has

very nice beaches, old church-es, wildlife and coral reefs.We’re also going to extend therunway at Puerta Princesa, andLegazpi is an up and comingdestination as well. You canswim with whale sharks there.These are the destinations wewould like to develop.

We also want to develop newtourism products like medicaland wellness tourism. We ex-port health workers, so whynot employ them here? Wehave nice warm weather andpeople speak English – theseare all advantages we shoulduse. Sports tourism is comingup which is combined with na-ture tourism and good weath-er. We already host eventsbecause of our natural beauty,the terrain and the welcomingspirit of the people.

HHooww ddoo yyoouu ffeeeell tthhee ppootteenn--ttiiaall ffoorr tthhee rreettiirreemmeenntt mmaarrkkeettaanndd tthhee mmeeddiiccaall ttoouurriissmm mmaarr--kkeett iiss??

I think we are only doingabout 10% of what Thailand isdoing. Our medical peoplespeak English, and that shouldbe an advantage. Except theproblem is that the people inthe hospitals are saying thatwe need open skies.

If you are flying in from Eu-rope and you need to stop inBangkok, why would youchange planes to come overto the Philippines when youcan stay in Bangkok? It shouldbe cheaper here, as well, sowe should have a bigger seg-ment than what we actuallyhave today.

One can retire very cheap-ly here, and we need to start de-veloping this segment of thetourism market.

YYoouu aarree aa ccoo--aauutthhoorr ooff tthheeOOppeenn SSkkiieess PPoolliiccyy,, wwhhiicchhwwoouulldd cceerrttaaiinnllyy ooffffeerr ggrreeaatteerraacccceessssiibbiilliittyy ttoo tthhee ccoouunnttrryy ffoorraaiirr ttrraavveell.. FFoorr aa ccoouunnttrryy tthhaattrreecceeiivveess 9955%% ooff ppeeooppllee vviiaa aaiirr--ccrraafftt oonn 77,,000000 aaiirrlliinneess,, tthhiiss wwiilllloobbvviioouussllyy bbee ooff ccrruucciiaall iimmppoorr--ttaannccee.. WWhheenn ddoo yyoouu eexxppeecctttthheessee rreeffoorrmmss ttoo ttaakkee ppllaaccee??

They’ve already been donebut they’ve not yet been im-plemented. There are a few or-ganizational matters left toresolve, but it is still a goodidea to draft a law so that whenthe next administration comesin the legislation is alreadythere.

Clark is home to budget air-lines, and people can fly out ofClark which is 56 miles fromManila for as little as $40-60 toanother Asian capital. This

shows how tourism has reallygrown with this policy. We aretrying to replicate this policyin other secondary airportsaround the country, and I amsure that this is the key to de-velopment.

When you have more peo-ple coming in, they will needplaces to stay, so there will bemore investment in accom-modation, and then prices willcome down because of com-petition, so it becomes a cycle.

TThhee PPhhiilliippppiinneess ttaakkeess 11%% oofftthhee ttoottaall gglloobbaall rreevveennuuee ffoorrMMIICCEE ((mmeeeettiinnggss,, iinncceennttiivveess,,ccoonnvveennttiioonnss aanndd eexxhhiibbiittiioonnss)),,llaasstt yyeeaarr bbrriinnggiinngg iinn $$33 bbiilllliioonn..

Yes, but it is a little disap-pointing considering we usedto be number one. We startedout in 1976 and we built a con-vention center, which used tobe the largest in Asia, but nowwe have been left behind. It’snow small compared to whatthe region has to offer. But thisis a private sector thing, and thegovernment should offer in-centives so that the private sec-tor can come in and buildexhibition and conventionscenters.

We have an advantage as regards MICE in that we speakEnglish, for example. Peoplewant to look for new destina-tions, and we are a tried andtested destination – it’s just thatour facilities are not big enough.

In a way, the Philippines is the unexplored neighbor. Americans know plenty about the country but perhaps are unaware of its many magical, and practical, attractions

Secretary of Tourism Alberto Lim discusses his country’s strategies to attract more tourists and why they should visit for more than just the sun and sand

The breathtaking Banaue Rice Terraces cover approximately 4,000 square miles of mountainside

El Nido in the province of Palawan is protected for its unique flora and fauna and pristine geologic formations

Alberto Lim, Secretary of Tourism

‘THE DEPARTMENT OFTOURISM ISN’T JUST AMARKETING ARM OFTOURISM. WE HAVE TOLET TOURISTS KNOWWHAT THEY’RE GETTINGFOR THEIR MONEY’

‘WE ALSO WANT TODEVELOP NEWTOURISM PRODUCTSLIKE MEDICAL ANDWELLNESS TOURISM.WE EXPORT HEALTHWORKERS, SO WHYNOT EMPLOY THEMHERE?’




It’s playtimefor thePhilippines

The Philippines is Asia’s firstgaming jurisdiction. PAG-COR’s authority covers theentire archipelago with theexception of the Cagayan Spe-cial Economic Zone andFreeport, which is where FirstCagayan Leisure & ResortCorporation steps in.

“A company was trying toget into online gaming and inAsia there is no jurisdictionfor online gaming,” explainsJose Mari Ponce, CEO andadministrator of the CagayanEconomic Zone Authority(CEZA). “We took advantageof that and I promoted SantaAna (the home of the CagayanEconomic Zone) as the firstand only regulated jurisdic-tion for interactive gaming.That started it.”

A subsidiary of Leisure &Resorts World Corporation(LRWC), First Cagayan actson behalf of the CEZA to af-ford gaming operators thechance to become part of apromising business environ-ment, providing an excellentplatform to penetrate thegaming markets of the Asia-Pacific region and beyond.

Reynaldo P. Bantug, chair-man of both First Cagayanand LRWC, explains: “FirstCagayan is not actually an op-erator of any gaming. Instead,we provide software and in-frastructure, as well as mak-ing sure that all regulationsare followed.”

The company’s main activi-ties include the operation, management, establishment,acquisition and leasing oftourism-related facilities andactivities. These, in turn, in-clude but are not limited togames, amusements, recre-ational sports, Internet games,casinos and golf courses.

The Cagayan Zone is locat-ed on the northeastern tip ofLuzon Island, and encompass-es the municipality of SantaAna and its neighboring islandsas well as the municipality ofAparri.

Casinos aside, First Cagayan’sintegrated resort on the idyllicnorthern coast also offers some-thing for the entire family.

“First Cagayan has a uniqueexperience to offer,” explainsMr. Bantug. “Gaming is just oneof the components of this re-sort in North Luzon. The tar-get is also tourism. We havebeautiful beaches to offer andthe facilities are here, too. Itwill be a hub for developmentin the area.”

Currently, there are 45 gam-ing operators in First Cagayan’sjurisdiction, all of whom un-derwent a strict screening toensure legitimacy in the busi-ness. “We only give licenses tolegitimate operators and we’revery strict in this regard. Pro-bity checks are of the utmostimportance. Anybody doingbusiness in the gaming sectorhas to be strictly above board

and legitimate,” comments Mr.Bantug.

It is this transparency thathas helped First Cagayan growits business and attract foreignoperators to the Philippines.

“Our business has to be trust-worthy and transparent in or-der to be able to maintain thetrust of the market. With re-gards to First Cagayan, I wouldsay that countries are confidentthat if they locate here theyhave legitimacy. For us it is im-portant that we can providethat seal of integrity and this isone of the most essential val-ues of our company,” claims thechairman.

First Cagayan’s mother com-pany LRWC, originally estab-lished as an industrialchemicals company that laterturned to professional bingogaming, has teamed up withBelle Corporation, the leadingdeveloper of high-end resi-dential and leisure properties,to invest $1 billion in the BelleGrande Marina Bay, an inte-grated entertainment projectthat will be built at PAGCOR’sEntertainment City Manila.

With this mega-project, LRWC hopes to attract a sig-nificant share of the gamingmarket to the Philippines. “Webelieve the entry of our groupwith Belle will expand the sizeof the pie. We will not be di-viding the pie of the gamingmarket, but rather expandingit,” says Mr. Bantug.

First Cagayan at theforefront of gamingPhilippines-based on-line gaming is a big, and strictly legitimate, business

Amusement and entertainment encompassed in integratedcasino resorts will both rival and complement other gaminghubs in Asia. The government hopes these resorts will alsogrow tourism numbers

Back in the days of Bugsy Mal-one, Las Vegas was a strip of de-veloped land in the middle ofthe Nevada desert where adultsfrom all walks of life could indulgein their addiction. The 1970s and80s saw a gradual shift towardsfamily friendly facilities, with theopening of Circus Circus, Wet ‘nWild water park and the MGMGrand Adventures amusementpark. Top billed singers and per-formances became everydaynames in Las Vegas. Today, cityis synonymous with family en-tertainment, and a visit to this cityof neon lights affords a fun filledtrip for people of all ages.

Although the term “integrat-ed resort” was coined in Singa-pore to describe a casino-basedvacation resort, Las Vegas isprobably the first true casebrought to life. The combina-tion of casino plus family fun hasproven a winning formula bothin Nevada and in Singapore, andmore recently in Macau, wheregambling revenues have sur-passed those of Las Vegas. ThePhilippines is stepping up to batnow to become yet anotherAsian gaming and entertainmenthub in an effort to boost not on-ly investment and a whole newsegment of tourism.

The Philippine Amusementand Gaming Corporation (PAGCOR) is currently devel-oping a new mega-project, calledEntertainment City Manila, thatwill rival its counterparts inneighboring countries.

Cristino Naguiat Jr., CEO ofPAGCOR, says that the compa-ny will contemplate solely thoseproposals that incorporate oth-er entertainment aspects apartfrom gambling. These could in-clude amusement centers andmuseums, for example. More-over, only high rolling investorswill be considered for Enter-tainment City. “Companies willhave to invest about $2.6 billionover the first three years beforethey will be allowed to operatea casino, and after that hopeful-ly it will reach a $4 billion mini-mum,” says Mr. Naguiat.

Already up and running to in-ternational acclaim is the Philip-pines’ first ever integratedtourism center: Resorts WorldManila (RWM). Located inNewport City, near the NinoyAquino International Airport,RWM is home to three hotels,shops, boutiques, cinemas,restaurants, and the NewportPerforming Arts Theater.

Another company involved

in boosting the Philippines’ gam-bling sector is First CagayanLeisure and Resorts Corpora-tion, who apart from develop-ing a resort in northern Luzon,also dominates the online gam-ing segment. And thanks to theFirst Cagayan’s leadership, thePhilippines is recognized as theonly regulated online gamingjurisdiction in Asia.

Jose Mari Ponce, CEO and ad-ministrator of the Cagayan Eco-nomic Zone Authority (CEZA),says there are more than 40 on-line gaming operators based outof the zone, several of which aremajor European players.

“Aside from being a pioneerin online gaming, we’re also apioneer in online gaming oper-ations. We were the first ones tointroduce live video streaming.We also introduced the firstproxy betting in Asia,” points outMr. Ponce.

Income derived from onlinegaming is being reinvested indeveloping the zone’s infra-structure, thus improving con-ditions for Cagayan’s otherbusiness as a transshipment portand agro-industrial center.

President Aquino has high-lighted that his country is “nowopen for business” and undernew management, denoting abusiness minded approach togovernance. Reynaldo P. Ban-tug, chairman of First Cagayan,believes the new president’s in-tentions are true and is opti-mistic that they will carry overinto gaming and resorts, partic-ularly given the ASEAN region’srising economic power. “The ad-ministration of PresidentAquino says what it means andfollows it up with the properpolicies and action. This will bea massive contribution for busi-ness in the Philippines for bothdomestic and foreign investors.Accordingly, there is confidencethat the government is there tohelp business grow,” he says.

“Suddenly we are seeing anexpansion of people with pur-chasing power and gaming isjust one of the industries thatare benefiting from this suddenaffluence in the ASEAN region.This applies especially now thatlegitimate gaming is now out inthe open. Before, all of this wasunderground and although thepotential was there, the gov-ernment did not take advantageof this vast untapped demand,”adds Mr. Bantug.

PAGCOR and First Cagayanhope Filipino integrated resorts

will appeal to the southeast Asianmarket and bring in a great manymore visitors who will then goand see the beautiful sights andenjoy the characteristics thatcomprise the Philippines.

“The country has a great dealto offer. Primarily our goods andservices, but we are also a veryhospitable people. I believe thatFilipinos are at the top and don’thave any competition at all as faras warmth and hospitality areconcerned,” claims Mr. Bantug.

Friendly people and servicesaside, the Philippines also boastspicture-perfect beaches, balmyweather, good infrastructure,and improved security, thanksto the Aquino administration,and its world-class casinos offertop Filipino and Asian enter-tainers that are sure to delighttravelers from around the world.

PAGCOR’s Casino Filipino Mimosa in Clarkfield, Pampanga

THE PHILIPPINES ISPREPARING ITSGAMING INDUSTRYTO RIVAL THOSE OFMACAU ANDSINGAPORE

AS ASIA’S SOLE ONLINE GAMINGJURISDICTION,VARIOUS EUROPEANOPERATORS USE THECOUNTRY AS A BASE

FOR THE HUGELYSUCCESSFUL RESORTWORLD MANILA ISTHE PHILIPPINES’FIRST INTEGRATEDRESORT

INTEGRATED RESORTSSHOULD BOOSTTOURISM,ATTRACTING FAMILIESWHO WILL STAY ANDENJOY THE SIGHTS



THE PHILIPPINES


The Philippine Amusement andGaming Corporation (PAG-COR) is more than it sounds. A 100% government-ownedand controlled corporation,PAGCOR was created in 1977to put a stop to the growing proliferation of illegal casinos.

In 1983, PAGCOR’s new char-ter gave the corporation broad-er responsibilities including theoperation of Casino Filipino(comprising 13 branches in ma-jor cities nationwide) and thepromotion of the Philippinetourism industry.

While these goals definedPAGCOR’s profile, a third goaldefined a nobler mission: thestate-run agency was also en-trusted to raise much-neededfunds for the government’s socio-civic and national devel-opment efforts.

Of PAGCOR’s income, 5%goes to the Bureau of Inter-nal Revenue (BIR) as fran-chise tax, and half of the 95%

goes to the National Trea-sury; 5% of the balance is re-mitted to the PhilippineSports Commission for fi-nancing sports development

programs. Other entities thatget a share of PAGCOR fund-ing are the Board of Claims,the President’s Social Fund,and cities hosting PAGCOR

casinos for their communitydevelopment projects.

For the first quarter of 2011,PAGCOR recorded total rev-enues of Php8.37 billion (over

$190 million), up $17 millioncompared to the same periodlast year.

Higher earnings translate di-rectly into higher remittances

for the government. PAGCORchairman Cristino Naguiat, Jr.is exercising more prudentmanagement and lowering op-erating expenses, saving PAG-COR millions. “During the firstquarter, we reduced operatingcosts by Php548 million ($12.45million), which realized hugesavings for PAGCOR,” he says.

Because of its upbeat per-formance, PAGCOR increasedits remittances to its agency-beneficiaries to Php3.76 billion(over $85 million). This wasbetter by Php228 million ($5million) compared to last year’scontributions. The agency’svaluable contributions to gov-ernment coffers help providebetter social services to the Fil-ipino masses.

Thanks to PAGCOR’s man-date for gaming, what is a funand entertaining activity tosome is a money-makingmeans with a philanthropic endto an entire nation.

PAGCOR, in charge of overseeing gaming in the Philippines, is also responsible in a large part for the country’s socio-economic development

Working towards a better future

MEDICAL & DENTAL

Help is on its way

In line with its vision to helpFilipinos in need, PAGCORbrings basic social servicescloser to the people throughmedical and dental missions.

As Henry Reyes, assistant VPof the community relations andservices department, says, “Wewant to be able to reach out tothe poor in such a way that theywill truly feel that PAGCOR isready to help them.”

Since July 2010, over 13,000members of underprivilegedcommunities and indigenousgroups have received freemedical consultations, dentalcheck-ups, and much neededmedicines and vitamins, ser-vices they would normally notenjoy due to a lack of health in-frastructure in the far-flungareas of the archipelago.

Though many must trek formiles to reach PAGCOR’shealth missions, the recipientsfind the journey worth it.“There is no accessible med-ical facility in our sitio [area],”

says Sirene Villafrea, a Duma-gat from the area of the IpoDam watershed. “We’re thank-ful for these services given byPAGCOR. We now have somevitamins and medicines with-in our reach.”

The gaming revenues ofPAGCOR are also put to usein disaster relief efforts. Theagency was one of the firstagencies to provide assistancewhen super typhoon Ondoyravaged thousands of familiesin Metro Manila. PAGCORalso readily extends help tocommunities struck by natur-al calamities.

PAGCOR brought morethan 500 cavans of rice (66,500pounds) to flood victims ofEastern Samar, Agusan del Sur,and Sorsogon in January, 2011.

PAGCOR provides free medical and dental care to thousands of people

PAGCOR sends medical and dentalhelp to the country’s depressed areas

EDUCATION

Schoolchildren top the agenda

Among PAGCOR’s far andwide reaching CSR programs,education ranks high on thecorporation’s list of priorities.

The agency is workingclosely with the Departmentof Education (DepED), De-partment of Environment andNatural Resources (DENR),and Technical Education andSkills Development Authori-ty (TESDA) for the P-NoyBayanihan Project, which aimsto manufacture thousands ofschool desks out of confiscat-ed logs from illegal logging.PAGCOR is giving an initialPhp100 million ($2.3 million)funding for said project.

PAGCOR is also commit-ted to building 1,000 newclassrooms in the next fewyears. One or two-storeyschool buildings will be con-structed in areas where thereis a substantial backlog inclassrooms.

The corporation also do-nates to public schools hun-dreds of school desks that aremanufactured by its fabrica-tion warehouse using the casi-nos’ old slot machine stands.

Also in the works is the E-Kawayan or EngineeredKawayan project wherePAGCOR may provide

funding for the productionof school desks using bam-boo. The project will helpspur a cottage industryamong communities.

Apart from these majorprojects, the state-run gam-ing firm is also workingclosely with the DepEd andthe Department of SocialWelfare and Development(DSWD) for its Feeding Pro-gram. The project aims toprovide balanced meals formalnourished schoolchild-ren in daycare centers andpublic elementary schoolsnationwide.

A total of 5,756 studentsfrom 90 schools across thecountry benefited from thePAGCOR Feeding Programfrom July 2010 to March 2011.About 25,000 school childrenhave become part of the sup-plemental feeding programsince its inception in 2008.

Working alongside the Department of Education, PAGCOR commits toschoolbuilding projects and programs to feed undernourished children

CHARITY

Pamaskong Handog 2010

While PAGCOR makes on-going contributions to societyand communities, its star ofgenerosity truly shines atChristmastime. The corpo-ration’s annual 12 Days ofChristmas gift-giving projecthappened in the second weekof December.

Called Pamaskong Handog,the project gave hope to or-phans, abandoned children,the elderly, the sick, the dis-abled and other less fortunatesectors around Metro Manilaand the provinces.

“This is our way of sharingPAGCOR’s blessings to the lessprivileged while highlightingthe corporation’s role as a com-passionate, caring institution,”explains chairman and CEOCristino L. Naguiat, Jr.

Gifts ranged from toys,clothes and candies (present-ed by Santa Claus “in person”)for children to practical toi-letries, towels and slippers forthe elderly. Some sick children,

such as those suffering fromhydrocephalus at the Hydro-cephalus Foundation of thePhilippines, received mone-tary donations to help defraytreatment costs.

The centers and institutionsalso benefited: orphanages re-ceived beds and entertainmentsystems, whereas hospitalswere given medicines, hospi-tal beds and medical equip-ment depending on the needsof the intended beneficiaries.Celebrity guests were also onhand to help provide enter-tainment and fun.

PAGCOR selected 24 char-itable institutions for its 2010program, while the provincialbranches held their own mis-sions the same time the gift-giving was happening in Manila.

PAGCOR hosts 12 Days of Christmas for the less fortunate

PAGCOR’s annual gift-giving programbenefits many disadvantaged Filipinos

The positive financial resultsthat the Philippine Amuse-ment and Gaming Corpora-tion (PAGCOR) currentlyenjoys are set to continue ris-ing, thanks to a mega-pro-ject the state-run gamingagency is currently develop-ing.

Dubbed the EntertainmentCity Manila (ECM), the pro-ject is taking shape in a three-square-mile lot of land alongthe reclaimed portion ofManila Bay’s Boulevard area.Ultimately, it is set to takethe tourism sector in thePhilippines to a whole newlevel, thanks to the Enter-tainment City’s wide offer-ing of activities for all ages.

The project intends to cap-ture the imagination not on-ly of Filipinos but foreigntourists as well. The plan isfor national artists to be rep-resented, for local cuisine tobe available, and for Enter-tainment City to stand outin Asia for its uniqueness andits embrace of local culture.

“We need to go back to theFilipino roots,” says JeannieJavellosa, the culture expertand brand engineer assignedto handle the rebranding ofPAGCOR and its Casino Fil-ipino. “We need a total Fil-ipino experience of whatgaming and entertainment isall about. We need to makeit not just a casino, but a to-tal leisure and entertainmentcomplex where people canbring their families.”

This is right in line withthe vision that PAGCORchairman and CEO CristinoL. Naguiat, Jr. has for Enter-tainment City and all its Casi-no Filipino branches. “We arein talks with world-class de-signers who can help createa modern Filipino brand andarchitectural designs for ourcasinos that tourists wouldreally want to see. In Macau,the casinos have a Westernlook, but we want to have ourown, unique Casino Filipinolook here.”

Entertainment City Mani-la will be a fully integratedentertainment and tourismresort, in which the actualcasinos will only account forless than 8% of the total de-veloped area. There will al-so be entertainment optionsfor children, theaters, stadi-ums, and facilities for MICE(meetings, incentives, con-ferences and exhibitions).

With such a wide assort-ment of activities and facili-ties , PAGCOR hopes toinfluence visitors to extendtheir stay. “Right now, someforeign tourists come here toplay for two to three days.But if we are able to createother recreation activities forthe whole family, thesetourists will have good rea-son to stay longer in thePhilippines,” explains thechairman.

Entertainment City is be-ing built over a 10-year peri-od, yet the first phase of oneconcept – specifically, theaforementioned casino – isalready complete. Built by a major investor in Enter-tainment City (formed by the partnership betweenMalaysia-based Star Cruisesand local company TravellersInternational), Resorts WorldManila is located near Ter-minal 3 of Manila’s NinoyAquino International Airport(NAIA) and is the first complex in the country to combine lodging brands(Marriott, Maxims and Rem-ington) together with thePhilippines’ largest casinoand a four-level mall. ResortsWorld Manila also featuresnumerous dining establish-ments, concerts and acro-batic shows, and a 1,500-seatperforming arts theatre.

Entertainment City’s oth-er biggest investors to dateare Japan’s Tiger ResortsLeisure and EntertainmentInc., Bloomberry Resorts andHotels Inc., and local pow-

erhouse SM Investments (theprincipal investment vehicleof the Sy group) which isworking with the Philippines’own Belle Corporation tobuild a world-class gamingfacility in a major luxury ho-tel to be managed by Radis-son.

The total cost of develop-ing the project is expected toamount to some $5 billion, afigure that will bring with it80,000 direct jobs and about400,000 indirect jobs. TheEntertainment City Manilaproject, particularly its casi-no gaming component, willalso generate a tremendousamount of revenue that will,according to PAGCOR’scharter, fill in governmentcoffers for use in carrying outits numerous social devel-opment projects.

Meanwhile, tourists fromall over Asia and the worldwill soon enjoy the Philip-pines’ newest and largest en-tertainment venue and all ofits world-class facilities char-acterized by the Filipino fla-vor and hospitality.

From tourism and foreign investment to job creation and MICE industries, PAGCOR’sEntertainment City is set to stimulate economic growth

PAGCOR is developing Entertainment City Manila over a 10-year period andenvisions a fully integrated resort with casinos, entertainment venues, shoppingand restaurants, and much much more

A hefty proportion of PAGCOR’s earnings from gaming operations and other related services goes to the government to ultimately fund national development programs

EntertainmentCity

PAGCOR donates school desks madeout of old slot machine stands

‘WE NEED A TOTALFILIPINO EXPERIENCEOF WHAT GAMINGAND ENTERTAINMENTIS ALL ABOUT...IT’SNOT JUST A CASINO,BUT A TOTAL LEISUREAND ENTERTAINMENTCOMPLEX WHEREPEOPLE CAN BRINGTHEIR FAMILIES’

‘WE ARE IN TALKSWITH WORLD-CLASSDESIGNERS WHOCAN HELP CREATE A MODERN FILIPINOBRAND ANDARCHITECTURALDESIGNS...WE WANTTO HAVE OUR OWN,UNIQUE CASINOFILIPINO LOOK’


philippines usat page 1-6.qxd 3/6/11 20:00 página 1 our ... · and member of the late president...

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