1June 2013

Volume 24 No. 06 June 2013

Gov’t welcomes PHL’s 2nd investment grade

The government welcomed the country’s second investment grade rating upgrade recently, this time from Standard & Poor's Ratings Services (S&P), saying it affi rms President Benigno S. Aquino III’s good governance initiatives. In March, Fitch Ratings handed the country’s fi rst-ever investment grade upgrade.

Presidential Spokesperson Edwin Lacierda said the second credit upgrade obtained by the Philippines is indicative of the sustained confi dence in the country's economy.

“The upgrade is not just an affi rmation of the Aquino administration's good governance initiatives, it also helps lower costs for borrowing which equals lower costs for hospitals, schools, and other vital structural improvements,” Lacierda added.

The Philippines' credit rating went up one notch to BBB- from BB+, with a stable outlook.

“The upgrade on the Philippines refl ects a strengthening external profi le, moderating infl ation, and the government's declining reliance on foreign currency debt,” S&P Credit Analyst Agost Benard said.

Department of Trade and Industry (DTI) Secretary Gregory L. Domingo expects investments to expand over 10% this year as a result of the credit rating upgrade.

“This upgrade will result in more investments both in portfolio, which will be invested in the stock market, and also in foreign direct investments (FDIs), which will be invested in factories and other industries. Overall, this will be good for us,” Domingo said.

He said the construction of more economic zones and industrial parks across the country was proof that

foreign investments were fl owing in and accelerating over time.

He cited the infl ux of trade missions this year, which was way more than what the Philippines accommodated in 2012, as another confi rmation of foreign interest in the country.

“We should expect a continued growth in terms of investments. The non-stop hiring, new constructions, new infrastructures—all these confi rm the trust and confi dence foreign investors have for the Philippines,” said Domingo.

He said the growth in investments should go beyond the urban centers and into the countryside.

DTI is pushing for more investments in the tourism and agriculture sectors to ensure that jobs are available to people in the rural areas.

Philippine Business Report2

INDUSTRYTRENDS

PHL development plan updatedThe government is updating the Philippine Development Plan (PDP) 2011-2016 to ensure sustainability and inclusiveness of the country’s current high economic growth, the National Economic and Development Authority (NEDA) reported.

“With the latest economic, social, and political developments here and abroad, there is a need to revisit and update the PDP to ensure the country is effi ciently heading toward its medium-term goals,” NEDA Deputy-Director General Emmanuel Esguerra said.

Esguerra said achieving inclusive growth remained a huge challenge and a top priority.

The review will assess and address gaps, constraints, and bottlenecks in attaining rapid, sustained, and inclusive growth.

Chinese fi rms eye PHLChinese businesses are bent on trading and investing more in the Philippines amid the country’s growing economy.

China-ASEAN Business Council (CABC) Executive Secretary- General Xu Ningning said they are interested in the Philippine agriculture, fi shery, infrastructure, mining, energy, information and communications technology (ICT), manufacturing, tourism, engineering service, and forestry sectors.

“There are huge cooperation potential and numerous business opportunities for trade and economic cooperation between China and the Philippines,” Xu said during the recent Philippine-China Business Forum organized by the Philippine Chamber of Commerce and Industry (PCCI).

Xu said the Philippines is one of their preferred markets and investment locations, citing its fast economic growth that is expected to accelerate 6%-7% this year.

“The Philippines should actively promote its business opportunities and famous brands in China. Philippine companies should enhance their capacity of exploring Chinese market,” he said.

DTI urges food exporters to enter ChinaThe Department of Trade and Industry (DTI) is encouraging Philippine food exporters to look at China as a market for their products.

“The market opportunities in China, not only for the biscuit sector, are enormous. We are therefore urging exporters to tap China because it is now one of the world’s biggest economies,” Bureau of Export Trade Promotion (BETP) Director Senen M. Perlada said.

Local biscuit manufacturers are now looking at entering the Chinese market given the Association of Southeast Asian Nations (ASEAN) – China Free Trade Area (ACFTA).

The ACFTA is the largest FTA in terms of population and third biggest in terms of nominal gross national product (GNP).

Under the agreement, the parties have committed to reduce the tariffs on goods.

Gov’t infra, capital outlay grow 50%Government spending for infrastructure and capital outlay rose 50.1% in the

fi rst quarter of the year to P58.1B, the Department of Budget and Management (DBM) reported.

“Disbursements are going exactly where they’re urgently needed: in programs and projects designed to boost our growth prospects, and which will translate to direct, immediate, and sustainable benefi ts to all Filipinos,” DBM Secretary Florencio Abad said.

As of end-March, the Department of Public Works and Highways (DPWH) has released around P34B to its creditors to pay for goods and services, 76% higher than last year’s P19.3B.

Maintenance and Other Operating Expenses (MOOE) also rose by 25.1% to peak at P70.4B.

Higher MOOE disbursements account for the implementation of other key socio-development programs, including those that provide access to safe and potable water, public health care services, agriculture development programs, and improved public education.

CAMPI hikes sales forecastVehicle sales in the country may hit 210,000 units this year, higher than the earlier projection of 200,000 units amid strong demand in the fi rst three months of the year, the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) announced.

“That includes sales of the AVID (Association of Vehicle Importers and Distributors, Inc.),” CAMPI President Rommel Gutierrez said.

CAMPI and the Truck Manufacturers Association, Inc. (TMA) sold 41,702 units in the fi rst quarter, up 29% from the 32,240 units in the same period last year, making it the highest sales posted for the period in history.

3June 2013

U.S. roadshow seeks fresh mining investmentsThe Philippines is encouraging fresh investments from the United States (U.S.) to sustain the momentum of the country’s fast expanding mining industry to surpass the more than USD 4-B revenues last year.

Chamber of Mines of the Philippines (COMP) President Benjamin Philip G. Romualdez said the positive outlook in the mineral development sector would allow the government to surpass its investment target for 2013 from USD 718M to USD 1B.

“In 2011, Philippine mines yielded a total gross mineral production of USD 4B, with large-scale mines accounting for USD 2.2B and small-scale mines and non-metallic mines producing USD 1.88B,” Romualdez said.

As of October 2012, he said some 1,600 exploration, mining, and processing applications were currently being evaluated, while some USD 20B of permitted projects are now in various stages of development, including a number that need fresh investments.

Romualdez said the Philippines is ideal for mining investors not only because of its wide selection of brownfi eld projects in gold, copper, nickel, iron ore, manganese, and chromite, but also because of the existence of a legal regime that allows for 100-% foreign ownership of mining projects through Financing or Technical Assistance Agreements (FTAA) or a 60/40 sharing through Mineral Production Sharing Agreement (MPSA).

Mining was one of the key sectors promoted during the 2nd Investment Roadshow organized by Philippine Ambassador to the United States (U.S.) Jose L. Cuisia Jr. in coordination with the Philippine Consulates General in Los Angeles, Chicago, and New York.

Gov’t teams to be created to improve competitivenessThe government is creating teams to improve the country’s business environment and its position in global competitiveness rankings.

The Department of Trade and Industry (DTI) said an Administrative Order (AO) formally creating the teams was expected to be signed during the recent Ease of Doing Business Summit.

“The said AO highlights the specifi c targets per indicator and the agency responsible. It also stipulates the inclusion of the agency targets as part of the performance-based incentives system,” the DTI said.

National Competitiveness Council (NCC) Private Sector Co-Chair Guillermo Luz said 10 teams would be created for each indicator tracked by World Bank’s Doing Business Report in terms of the diffi culty or ease in doing business in the country.

“Eight of the teams are already set-up and two are in the process of being put up because they involve the courts,” Luz said.

The private sector has also been tapped to help in improving the ease in doing business in the country.

Ease in doing business indicators

• Starting a business• Dealing with construction permits• Getting electricity• Registering property• Getting credit• Protecting investors• Paying taxes• Trading across borders• Enforcing contracts• Resolving insolvency

Agencies involved in the business teams

• Department of Trade and Industry (DTI)• Department of Finance (DOF)• Bureau of Internal Revenue (BIR)• Bureau of Customs (BOC)• Securities and Exchange

Commission (SEC)• Department of the Interior and

Local Government (DILG)• Department of Justice (DOJ)• Credit Information Corp. (CiC)• Social Security System (SSS)• Home Development Mutual Fund (Pag-IBIG)• Philippine Health Insurance Corp.

(PhilHealth)

Tourist arrivals up 11% in Q1Tourist arrivals grew 11% to 1.27M in the fi rst quarter of the year, refl ecting improved confi dence of international travelers in the Philippines, the Department of Tourism (DOT) reported.

Top sources of PHL tourists

Countries % share

Korea 25.86U.S. 14.65Japan 9.00China 7.74Taiwan 4.24Australia 4.23Singapore 3.27Canada 3.03Hong Kong 2.84United Kingdom 2.56Malaysia 2.14Germany 1.77

DOT Secretary Ramon Jimenez said they are optimistic the infl ux of foreign tourists would be sustained for the rest of the year.

“We are on track of our target of 5.5-M foreign tourist arrival for 2013,” Jimenez said.

Jimenez said the number of tourist arrival is expected to hit 10M by the end of the Aquino administration in 2016.

Philippine Business Report4

AGRICULTURE/AGRIBUSINESS AND FISHERY

Indofood considers PHLPT Indofood Sukses Makmur Tbk of Indonesia may form a joint venture in the Philippines to invest in a large-scale commercial farm.

PT Indofood reported they are already in talks with offi cials of the Department of Agriculture (DA).

The group preferred to lease and develop a land into a large-scale commercial farm.

BANKING

Rebisco’s banking arm to open 250 branchesAsia United Bank (AUB) of Rebisco Group is planning to open 250 branches over the next fi ve years.

AUB First Vice President Andrew Yap said the expansion would be funded by the planned P9.68-B initial public offering (IPO).

Currently, AUB’s branch network consists of 117 branches strategically located in Metro Manila and key cities including 28 acquired from Asiatrust Bank.

The bank also plans opening 20 new branches in Metro Manila in 2013 and 33 in 2014, as well as 25 outside Metro Manila this year, and 10 by next year.

AUB also plans to sell up to 88M shares, including 8M option shares to cover the overall allotment option.

BPO

Ayala Corp. acquires shares in LBM HoldingsThe LiveIt Investments Ltd. of Ayala Corp. (AC) said Stream Global Services, Inc. has acquired all outstanding shares of United Kingdom (UK)-based LBM Holdings Ltd. while adding almost USD 90M in annual business process outsourcing (BPO) revenues.

“LBM will enable Stream to better penetrate the UK, the world’s second largest English language market, as well as strengthen its ability to help customers grow their sales through LBM’s revenue generation service offerings,” LiveIt said.

Stream Chairman and Chief Executive Offi cer (CEO) Kathy Marinello said LBM has proven experience in creating highly precise target lists of people who will be more inclined to buy products and services, which will further enhance the Stream offering.

ENERGY

Jetti begins construction of bulk terminal in BataanFuel retailer Jetti Petroleum Inc. has begun the construction of a P1-B bulk terminal in Mariveles, Bataan.

The company said the facility has a rated storage capacity of 68M liters.

The project was granted a fi ve-to seven-year income tax holiday (ITH) and other incentives as endorsed by the Department of Energy (DOE) under the Downstream Oil Industry Deregulation Act.

Meanwhile, the company is spending up to P100M to bring its network of 100 retail stations to at least 120 this year.

SC 55 consortium commits to Palawan drilling programThe consortium behind Service Contract (SC) 55 said it is committed to exploring and developing the offshore gas fi eld in Southwest Palawan.

“Certainly, all the joint venture partners are committed to delivering the Cinco well consistent with our service contract commitment,” consortium member Otto Energy Ltd. Chief Executive Offi cer (CEO) Gregor McNab said.

Trans-Asia President Francisco Viray said the company shares the same commitment with Australia’s Otto Energy, adding that BHP Billiton is pushing through with the project.

Kuwaiti fi rm joins Galoc oil fi eld consortiumKuwait Foreign Petroleum Exploration Company (KUFPEC) joined the consortium developing the Galoc oil fi eld after acquiring Risco Energy Pte Ltd., whose unit has a 26.84-% interest in the Service Contract (SC).

“The entry of a high quality partner such as KUFPEC into the Galoc joint venture is a testimony to the strength of the Galoc project overall,” McNab said.

TRADE ANDINVESTMENTS

He said they are also confi dent that amid continuing implementation of tourism-related reforms, more foreign visitors would start traveling to the Philippines.

“Philippine tourism has found its strength. There is room to grow and improve our offering even more,” he said.

5June 2013

Otto Energy noted that the joint venture has approved the second phase of the oil fi eld development, which will involve drilling of two wells this month. The wells are expected to yield oil in the fourth quarter.

EDC to resume operations of BacMan geothermal unitEnergy Development Corp. (EDC) plans to resume the operations of Unit 1 of its Bacon-Manito (BacMan) geothermal plant in Albay to help ensure a steady supply of power.

EDC recently shut down the 55-megawatt (MW) BacMan 1 for inspection and hopes to restart operations immediately.

However, it would take time for EDC to resume operations of Bacman 2 due to problematic parts that had to be replaced, while the company is also working on resuming the operations of BacMan 3.

The cost of resuming the operations of all three units would amount to roughly USD 100M.

URC breaks ground for USD 35-M ethanol plantUniversal Robina Corp. (URC) recently broke ground for its USD 35-M ethanol distillery plant, which will produce ethanol fuel in support of the government’s efforts to reduce the country’s dependence on imported ethanol.

The plant, located in the company’s sugar central facility in Manjuyod town in Negros Oriental, will start operations in March 2014. It will produce some 100,000 liters daily.

The distillery plant will run mostly on blackstrap molasses, a by-product of sugar.

EXPORT

BOI approves 3 export projectsThe Board of Investments (BOI) has approved three export-oriented projects, namely Mega Manila G.N.B Motors Corp., Daesang Ricor Corp.(DRC), and Cloud 9 Global Sourcing Corp., with a total of P599.46M worth of investments.

The Mega Manila G.N.B’s project in Naic, Cavite, which produces copper ingots for cables and plastic pellets, costs P22.2M. It will have an annual capacity of 700 metric tons (MT) for copper ingots and 1,167MT for plastic pellets.

Meanwhile, the DRC’s project in Cagayan de Oro, which produces glucose syrup, costs P567.3M. It will have an annual capacity of 66,000T and at least 70% of the plant’s output would be exported to South Korea, Viet Nam,and Thailand.

On the other hand, the Cloud 9 Global Sourcing Corp.’s project, which manufactures apparel for men, women, and children, will have P9.96M worth of investments. It is expected to produce 586,872 clothing pieces per year to be shipped in South America.

GREEN PROJECTS

RE fi rm gets BOI perksThe Board of Investments (BOI) approved Asiapac Green Renewable Corp. as the renewable energy (RE) developer of four hydropower plants worth P1.67B in Mountain Province.

Solar plant gets BOI perksThe Board of Investments (BOI) approved the granting of incentives to Mirae Asia Energy Corp., the proponent of a 20-megawatt (MW) solar power in Region 1.

Mirae Asia is putting up a P2-B solar photovoltaic power project on a 60-ha barren sand dunes of Barangay Paguludan, Currimao, Ilocos Norte. The plant is expected to start operations by July 2014.

The project will provide additional 30.5MW of clean electricity to the Luzon grid.

EDC breaks ground for wind energy projectEnergy Development Corp. (EDC) has recently broken ground for its 87-megawatt (MW) Burgos wind project in Ilocos Norte.

The USD 300-M wind farm project, expected to be operational next year, would help ensure power stability in the Luzon grid as well as boost employment and tourism in the province.

Once operational, the Burgos wind project is expected to generate approximately 233 gigawatt-hours of electricity annually and power over a million households.

Asiapac’s RE projects in Mountain Province

Project Location Electricity Generation Project Cost (in million kWh) (in P million)

2.4-MW Tanudan Barangay Lias, 11.7 449.0 Hydropower Project Barlig 2.4-megawatt (MW) Barangay 8.7 369.8Dicapan Hydropower Lubon, Tadian Project 3-MW Lower Siffu Barangay 426.8 9.9 Hydropower Project Balangao

2.75-MW Upper Siffu Barangay 400.7 9.6 Hydropower Project Balangao, Natonin

Philippine Business Report6

INFRASTRUCTURE/PUBLIC PRIVATE PARTNERSHIP

DOTC to fast track P82-B infra projectsThe Department of Transportation and Communications (DOTC) is confi dent that majority of the infrastructure projects under the public-private partnership (PPP) program would be completed before the 2016 elections.

DOTC Secretary Joseph Emilio A. Abaya said the government is now at the catch-up point but is optimistic that the DOTC would be able to complete major infrastructure projects with a combined value of about P82B.

In the next few years, bidding will begin for other projects that are either in the study or engineering design phase, Abaya said.

PPP contracts set to be awarded this year

• P30.9-B extension of the Light Rail Transit Line 1 (LRT1) all the way to Niog in Bacoor, Cavite from Baclaran in Pasay City

• First phase of the P17.5-B Mactan-Cebu international airport expansion project worth P8.9B

• P1.72-B automated fare collection system (AFCS) project that would provide

a single-ticket system for the Metro Rail Transit (MRT)

and LRT

Gov’t allots P29B for tourism infrastructureThe government is spending P29B, or P12B this year and P17B in 2014, on a tourism infrastructure program that will connect tourist spots to major roadways.

The program is being implemented by the Department of Tourism (DOT) and Department of Public Works and Highways (DPWH).

“DPWH will be building roads in areas identifi ed in the national tourism plan in order to improve

the travel experience for tourists,” DOT Secretary Ramon R. Jimenez Jr. said.

P360-M Clark terminal up by SeptemberThe government expects to complete the expansion of the existing passenger terminal at the Clark International Airport in September, ahead of the launch of the inaugural Clark-Dubai fl ight by Emirates scheduled in October.

Clark International Airport Corp. (CIAC) President and Chief Executive Offi cer (CEO) Victor Jose I. Luciano said the P360-M project will double the capacity of the existing terminal to 4M-5M passengers from the current capacity of 2M-2.5M passengers.

Boracay Water completes treatment plant upgrade Manila Water subsidiary Boracay Water has completed the upgrade of its Balabag Sewage Treatment Plant (STP).

Manila Water Co. Inc. said the upgrade, which was completed four years ahead of schedule, will treat up to 6.5M liters of wastewater per day, doubling its previous capacity of 2.6M liters daily.

Manila Water said this would serve the island’s growing needs.

Maynilad spends P61M for leaking pipes replacementWest Zone Water concessionaire Maynilad Water Services, Inc. is spending P61M to complete the replacement of 11-km leaking pipes in East Fairview and East Fairview Parkhomes within the fi rst half of the year.

“Leaks and mainline breakages not only cause unscheduled water interruptions but also serve as entry points for water contaminants,” Maynilad President and CEO Ricky P. Vargas said.

Maynilad is coordinating with the Quezon City Engineering Offi ce and affected barangay offi cials. Affected roads would be

immediately restored with temporary asphalt pavement to make the roads passable.

MASS HOUSING

4 housing projects seek tax perksTwo units of home builder Vista Land and Lifescapes, Inc. are seeking registration with the Board of Investments (BOI) to enjoy tax perks for the expansion of mass housing projects.

In a published notice, Household Development Corp. “is applying for registration with the BOI as expanding developer of low-cost mass housing project with a capacity of 54 housing units on a non-pioneer status” for its Cerritos Hills, Phase 1 in Brgy. Molino IV, Bacoor, Cavite.

On a separate notice, Communities Tarlac, Inc. fi led an application for registration “as expanding developer of low-cost mass housing project with a total capacity of 171 housing units on a non-pioneer status” for its Camella Tarlac Phase 3 in Brgy. Maliwalo, Tarlac City.

Meanwhile, P.A. Metro Residence Builders, Inc. (PAMRBI) is also applying for registration with the BOI as an expanding developer of low-cost mass housing project with a capacity of 212 housing units on a non-pioneer status for their East Residences-Ortigas II Condominium in Ciudad Grande II, Monaco Street, Ortigas Extension, Pasig City.

PAMRBI is likewise seeking incentives as a new developer of low-cost mass housing project

7June 2013

with a capacity of 280 housing units on a non-pioneer status for its Amaranthe Project Phase I in Brgy. San Martin de Porres, Parañaque City.

Also, Italpinas, “Euroasian design and eco development corp. (ITPI)” wants to qualify for incentives as an expanding developer of low-cost mass housing project Primavera Residences Tower B at Pueblo De Oro Business Park in Cagayan de Oro City on a non-pioneer status.

Rebisco Group expands housing presenceThe Rebisco Group of Companies is shoring up its presence in the real estate sector by building more housing projects catering to the middle and low-income markets.

Rebisco Biscuit Corp. Treasurer Jacinto Ng Jr. said the group is looking to acquire properties in Alabang, Cavite, Rizal, Laguna, and Bulacan for development into house and lots to help reduce the huge housing backlog in the country and capitalize on robust remittances from overseas Filipinos (OFs).

Through Earth+Style Group, the fi rm develops suburban housing communities for the middle-income market and large OF market.

Vista Land and Lifescapes applies for BOI registrationA unit of Vista Land and Lifescapes, Inc. is applying for registration with the Board of Investments (BOI) for a 690-unit low-cost mass housing project on a pioneer status for its Communities Cagayan Inc. in Brgy. Lumbia, Cagayan de Oro City.

Communities Cagayan is under Vista Land’s business unit Communities Philippines Inc. and offers low-cost and affordable residential properties outside Mega Manila area.

MOTOR VEHICLES

Honda to open three more dealershipHonda Cars Philippines, Inc. (HCPI) is planning to open three more dealership on top of the two which were announced earlier.

The new dealership across La Salle Greenhills will have a 2,500-sqm land area; with and showroom and service facilities that can accommodate preventive maintenance, general repair, and body-and-paint services. The project is targeted to be operational by the last quarter of 2013.

Another new dealership located near SM City Cebu and Cebu Business Park will occupy a bigger land area of about 5,000 sqm and will offer Honda’s full line-up and service facilities.

HCPI said another dealership is slated to open in Calamba.

Earlier, HCPI said it is set to open two new dealership located in Camarines Sur and Leyte which are expected to start operations in the second-half of the year.

Dong Feng eyes assembly plantDong Feng Motor Philippines is eyeing to establish an assembly plant in the Philippines.

“… they may put up an assembly plant in the Philippines or anywhere in ASEAN [Association of Southeast Asian Nations], or whichever will provide more attractive investment package,” Philippine Chamber of Commerce and Industry (PCCI) Chairman Emeritus Francis Chua said.

Chua said with the ASEAN integration, the exact location of Dong Feng’s assembly operations would not be signifi cant, as investors would look at the ASEAN as one market.

He said Dong Feng was planning to put up more showrooms across the Philippines to promote its products better.

RESEARCH AND DEVELOPMENT

STI acquires West Negros UniversityListed academic institution STI College Systems Holdings, Inc. has boosted its schools line up by expanding in Western Visayas.

STI Holdings said it has entered into a memorandum of agreement (MOA) to acquire controlling stake in West Negros University (WNU) Corporation that owns and operates West Negros University in Bacolod City.

STI Holdings has allotted P390M for its schools acquisition program this 2013 while committing to continuously expand its own portfolio with the groundbreaking of two new schools in Las Piñas, and Calamba, Laguna.

To date, it has 85 schools nationwide, of which 55 are franchised and 30 are company-owned.

MINING

Holcim readies PHL expansionHolcim Philippines Inc. plans to seek incentives from the Board of Investments (BOI) for future projects aimed at increasing its annual production capacity by 2M to 2.5M metric tons (MT) by 2017.

“The expansion project in the Bulacan plant would need investments of USD 450M to USD 500M,” said Holcim President and Chief Executive Offi cer (CEO) Eduardo A. Sahagun.

The company also plans to reopen a cement factory in Mabini, Batangas to add as much as 1M MT yearly.

Philippine Business Report8

POWER

NGCP seeks ERC okay for P3-B transmission lineThe National Grid Corporation of the Philippines (NGCP) is seeking the approval of the Energy Regulatory Commission (ERC) for the implementation of the P3-B Calaca-Dasmariñas 230-kilovolt (kV) transmission line project.

NGCP said a provisional authority from the ERC would allow it to start the construction of a 57-km steel tower double circuit transmission line.

“This project will ensure that the additional supply coming from the power plants of the northern regions will be fully utilized while maintaining the reliability and stability of the grid,” NGCP Spokesperson Cynthia Perez-Alabanza said.

The project involves two components – transmission and substation.

Sunwest inks P1-B project fi nancing deal with BDOSunwest Water and Electric Co. II (SUWECO 2) has signed a P1-B project fi nancing deal with Banco de Oro Universal Bank (BDO Unibank).

The loan would be used to facilitate the development of the 8-megawatt (MW) Villasiga hydropower project located in Barangay Igsoro, Bugasong, Antique.

Sunwest Group of Companies Chief Executive Offi cer (CEO) Elizaldy S. Co said the project is already 85% complete and is expected to generate power starting October this year.

Semirara allots USD 500M for coal plant expansionSemirara Mining Corp. will spend as much as USD 500M for another expansion of its coal-fi red power plant complex in Batangas, Semirara Vice Chairman and Chief Executive Offi cer (CEO) Isidro A. Consunji reported.

Consunji said construction of the 300-megawatt (MW) to 400-MW power plant, which will use the circulating fl uidized bed or pulverized coal boiler technology, will start in the third quarter.

The additional power plant will be operational after two and a half years.

First Gen eyes LNG terminal by 2016First Gen Corp. President Giles B. Puno said the company is working on the design of the liquefi ed natural gas (LNG) facility and is eyeing suppliers from countries in Asia, Australia, and possibly in the Middle East.

“We need to start construction by next year if we are to have it by 2016 to 2018,” Puno said.

The company, which sources its fuel requirements for its two plants in Sta. Rita and San Lorenzo in Batangas, is looking to build a land-based LNG facility as gas source replacement.

Meralco unit, Japanese fi rm tie up for power projectMeralco PowerGen Corp. (MGEN) and Chubu Electric Power Corp. of Japan are teaming up for the construction of a 1,500-megawatt (MW) liquefi ed natural gas (LNG) power plant in Atimonan, Quezon.

“Meralco PowerGen, in partnership with Chubu Electric, is working under a joint study agreement to assess the construction of a liquefi ed natural gas (LNG) combined cycle-fi red power plant and regasifi cation facility,” said Meralco PowerGen Senior Vice President Angelito Lantin.

Lantin said the company is waiting for the issuance of the environmental compliance certifi cate for the proposed project and without signifi cant opposition, the project is expected to be operational by August 2018.

AboitizPower to build 2 more hydro plantsAboitizPower subsidiary Hedcor is adding two more hydropower plants in its portfolio.

The company recently announced it would build two cascading plants in Bukidnon, which would be tapping power from the Amusig, Guihean, and Tanaon rivers.

The fi rst plant, the Manolo Fortich Hydro 1, will have a capacity of 35.2 megawatts (MW) while the second plant, the Manolo Fortich Hydro 2, will generate 16.4 MW.

Hedcor said the two plants combined can produce a total of almost 300M kilowatt hour (kWh) a year.

KEPCO plans new power plantKorea Electric Power Corporation (KEPCO) is planning to build a new power plant in the Philippines, KEPCO President and Chief Executive Offi cer (CEO) Kyu-Byeng Hwang said.

Hwang said the company would be scouting for a viable location in the Luzon area and then conducts a feasibility study.

“In Luzon, there is future demand,” Hwang said.

Alcantara fi rm rushes Iligan power plant jobMapalad Power Corporation (MPC), the unit of the Alcantara Group (AG) that operates the 98-megawatts (MW) Iligan Diesel Power Plant (IDPP), and

9June 2013

the Energy Regulatory Commission (ERC) vowed to ensure the delivery of electricity to key Mindanao areas.

Mapalad Power is rushing the rehabilitation of the dormant power plant while the ERC is speeding up access of key Mindanao distribution utilities to the power it will generate.

The Alcantara Group is spending P1.2B covering the acquisition, rehabilitation, and other costs to reactivate the diesel plant.

REAL ESTATE

SMDC allots P71B for residential projectsSM Development Corporation (SMDC) announced it will spend P71B in the next three years to drive its expansion activities in the country.

The property developer will launch 13,000 units this year, almost double the 7,000 units last year.

“For 2013, we plan to launch four new projects and expand three existing developments in Metro Manila,” SMDC Vice Chairman and Chief Executive Offi cer (CEO) Henry Sy Jr. said.

RLC building P30-B business parkRobinsons Land Corporation (RLC) is transforming a huge property along C-5 in Libis, Quezon City into a P30-B major business park.

The project will be the second business park of Robinsons Land after the Cybergate Business Park in Mandaluyong City.

Meanwhile, RLC President Frederick Go said the company would pursue investments in shopping malls, residential hotels, and offi ce developments.

Global Estate allots P20B for Twin LakesGlobal Estate Resorts Inc. (GERI), a subsidiary of Alliance Global Group Inc. (AGI), is spending P20B to develop the Twin Lakes tourism estate.

The 1,149-ha property in Tagaytay City and Laurel, Batangas will be the fi rst vineyard resort community in the country.

Also, the project features commercial and retail hubs, residential villas and condominiums, a nature park, and a university park.

Manila Water Boracay subsidiary completes upgradeBoracay Island Water Company (BIWC), a subsidiary of Manila Water Company, has doubled the capacity of its Balabag Sewage Treatment Plant (STP) from 2.6M liters of wastewater per day (MLD) to 6.5 MLD after completing its upgrade four years ahead of schedule to accommodate the island’s growing needs.

“With the tourist infl ux in the Island hitting the 1M mark ahead of schedule, we too had to keep pace with the demand to ensure that our services are suffi cient for this growing tourism hub,” BIWC General Manager and Chief Operating Offi cer (COO) Bernardo C. Mañosca said.

BIWC plans to construct another STP with 5MLD worth P2.5B.

BIWC is a joint venture of Manila Water and the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) with 80% and 20% shareholdings, respectively.

RETAIL

Japanese convenience store plans expansionA new convenience store from Japan, owned by SIAL CVS Retailers, Inc., a joint venture between Ayala and Rustan’s, plans to set up 40 stores within the year and 300 more in the next fi ve years after having

recently just opened their fi rst store in April at Glorietta 3 in Makati.

Already, several branches of FamilyMart are being scheduled to open. After the Glorietta 3 branch and at the Metro Rail Transit (MRT) Ayala station, two more are to be set up in Makati at Glorietta 5 and Dela Rosa Carpark 1.

One branch would also be opened each at The District in Cavite, Metro Point Mall in Pasay, the Exchange Regency in Pasig City, and Global One Center in Eastwood, Quezon City.

SM Retail opening 30 outletsSome 20 to 30 more outlets may join the roster of supermarket chains by SM Retail Group within this year, mostly Savemore stores, to strengthen its position.

SM Retail is planning the possibility of acquisitions to bolster their dominance in the business of supermarkets.

A joint venture agreement was signed between the Lim family’s Waltermart Group of Companies and the SM group this January.

In 2012, SM Retail had 202 outlets, 156 of which were supermarkets including 37 Hypermarket outlets and 82 Savemore outlets, while 46 of the total are department stores.

TELECOM

Globe plans BayanTel takeoverAfter acquiring 96.5% of Bayan Telecommunications Inc.’s bondholders and becoming its biggest creditor, Globe Telecom Inc. now intends to convert debts into equity by becoming its major

Philippine Business Report10

BILATERALAGREEMENT

COMPANY NOTES

Cosco plans P12-B expansionCosco Capital Corp. is looking to expand its presence in liquor, property, and oil storage sectors and to venture into non-food sector that would require P12B.

Of the P12B, P6B would be allotted to real estate businesses, P3B for debt fi nancing, P2B for its diversifi cation into non-food specialty retail, and P1B for liquor distribution.

It eyes expansion in the Visayas and Mindanao areas for its liquor business distribution network, and

the development of commercial retail establishments in the provinces.

Eight sites have already been identifi ed, each to have P450M to spend for construction and land acquisition.

National Book Store to open 15 new outletsNational Book Store (NBS) is adding 15 more branches to its existing 165 stores nationwide as it contemplates listing into the Philippine Stock Exchange (PSE).

The new branches will be put up all over the country, with some to be placed inside SM Malls such as one that is to take up 450 sqm in SM Aura in Bonifacio Global City, Taguig.

NBS set up a branch in Hong Kong fi ve years ago as a test market but they see it as an ongoing experiment until now, and with higher overhead cost, they opted for local expansion.

NBS is planning to enter the stock market through backdoor listing using Vulcan Industrial and Mining Corp., renaming it to National Book Store Retail Corp., pending the approval of the Securities and Exchange Commission (SEC).

It is shifting its focus mainly to retail, with mining taking a backseat with wholesale, publishing, printing, manufacturing, distribution, and contracting.

Japan to fund hydropower projects in PHLJapan signed a grant agreement with the Philippines for mini-

shareholder with a revised rehabilitation plan.

Globe bought a total of USD 400M below par to USD 130M of the other BayanTel’s debts, which the Lopez Group controls with 97-% stake.

Under the current rehabilitation plan, Globe is allowed to own only up to 40% of the other company. The revised rehabilitation plan that Globe will jointly fi le with BayanTel would allow the complete conversion of the debts into equity.

“We will integrate operations but they will be separate entities,” Globe Chief Financial Offi cer Alberto M. de Larrazabal said.

TOURISM

Manila Ocean Park seeks incentivesChina Oceanis Philippines Inc., operator of aquatic theme park Manila Ocean Park, has applied for incentives from the Board of Investments (BOI) for the expansion of its Sea Life Discovery project.

The theme park, which opened in 2008 and falls under tourism in the 2012 Investments Priorities Plan (IPP), shall be qualifi ed for income tax holidays (ITH) for at least six years with the approval of their application.

However, with the new facility being only an expansion of the existing park, the validity of incentives would be halved.

Under the government's IPP 2012, companies participating in ventures included in the mandatory list for the investments promotions blueprint may enjoy tax perks.

Business, ecotourism park to rise in Roxas CitySacred Heart of Jesus Prime Holdings is currently developing Pueblo de Panay, an industrial commercial district and ecological tourism site to be situated in a 250-ha area in Roxas City, Capiz that will connect to two of three city highways.

The project will be developed in only 130 ha of the total land area in fi ve to 10 years, preserving much of its natural resources. It would be joined to the Lawaan and Sibaguan Highways, connecting to downtown Roxas City, districts of Capiz, Antique, Aklan, Boracay, and Iloilo.

Already, three hotels and Robinson’s Department Store, which is set to open by November, have begun building.

Pueblo de Panay will get license partnerships with the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) and the Philippine Economic Zone Authority (PEZA) for incentives.

The project will provide jobs to local communities by becoming a manufacturing and processing center for products from the province.

11June 2013

ASEANWATCH

ON THECALENDAR

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hydropower development projects in the provinces of Ifugao and Isabela through the Japan International Cooperation Agency (JICA) in line with the Philippine Development Plan (PDP) 2011-2016.

The project is seen to strengthen the government's move for the development and utilization of sustainable, alternative energy resources.

The grant for the Ifugao project is ¥893M or P377.5M to fi nance the construction of an 810-kilowatt mini-hydropower plant in Barangay Haliap, Asipulo.

This will also provide secure resource for the conservation of the Ifugao rice terraces that will help the province, which is improving on its native rice varieties for local and international markets.

The project will be implemented by the Department of Energy (DOE) and the Provincial Government of Ifugao from May 2013 to February 2015.

Meanwhile, the P62.14-M mini-hydropower plant that is being set-up by the DOE and the National Irrigation Administration (NIA) from May 2013 to November 2014 in Isabela has a 45-kilowatt capacity.

Isabela is a substantial source of rice grains and corn for the country.

PHL, Netherlands customs sign agreementThe Philippines and the Netherlands signed the Rules for Implementation of the Agreement on Mutual Administrative Assistance in April to build a stronger coordination and information exchange between the customs agencies of both countries.

Philippine Bureau of Customs (BOC) Commissioner Rozzano Rufi no B. Biazon and the Netherlands’ Directorate-General for Tax and Customs Policy Legislation Director Hans Van Bodegraven signed the agreement, which aims to effectively address the problem on “cross-frontier

PHL no longer dark horse in AsiaThe growth of the Philippine economy was the subject of Philippine Ambassador to Washington Jose Cuisia Jr.’s speech to more than 120 members of the Chicago Council on Global Affairs, composed mostly by representatives of the business community and the academe, encouraging investments in the country.

“I hope I was able to convey to you… that the Philippines is no longer a dark horse: it is making a competitive run. Investors trying to avoid some of the risks in Asia are beginning to fi nd out that the biggest risk is not being in the Philippines,” Cuisia said.

Consul General Leo Herrera-Lim said this was the fi rst time after many years that a Filipino diplomat has been invited by the Council that holds forums for world leaders, policymakers, and experts to discuss

traffi cking of illicit goods ranging from narcotic drugs, hazardous goods, endangered species, and other contraband commodities that could pose danger to society.”

The agreement also established a working cooperation between the two countries to set the range for the precise appraisal and assessment of Customs duties and taxes on goods to be shipped between the two countries.

Enhancing Global Image Thru Packaging for Non-Food ProductsPackaging plays an important role in product marketing, promotion campaigns, pricing, defi ning product character, and creating a brand identity. Learn the factors to consider for cost-effective and market-competitive packaging.

The Philippine Trade Training Center (PTTC) will conduct this training on June 28, 2013. For more information, please contact Ms. Eva Ancheta at evagancheta@gmail.com.

Lean ManufacturingThis seminar will provide the participants with survival tools to face the demand for higher quality, faster production time, and lower prices in a global market. This two-day activity will be held on July 8-9, 2013. For details, please contact Ms. Aileen Malacaste at lenragamat@gmail.com.

issues both in the national and international level.

“Progress is palpable in the Philippines,” said Goldman Sachs Investment Banking Division Vice Chairman Carl Stern.

Philippine Business Report12

39.540

40.541

41.542

42.5

Jun-13May-13Apr-12Mar-12Feb-13Jan-13

Peso per US Dollar Rate

0123456

Jun-13May-13Apr-13Mar-13Feb-13Jan-13

Interest Rate (%)

Economic Indicators

As of June 4, 2013 As of June 4, 2013

Published monthly by the Trade and Industry Information Center (TIIC), Department of Trade and Industry, 2F Trade and Industry Building, 361 Sen. Gil J. Puyat Avenue, Makati City 1200, Philippines • Phone (+632) 895.3611 • Fax (+632) 895.6487 • To subscribe, e-Mail: publications@dti.gov.ph • Online: http://www.dti.gov.ph/dti/index.php?p=116

Editorial Team: Anne L. Sevilla, Editor-in-Chief • Vic S. Soriano, Managing Editor • Cresenciano P. Par, Assistant Editor • Jam A. Hourani, Emman R. Caleon, Hazel Maryam S. Dizon, and Maria Joanna Angela D. Cruz, Writers • Ren C. Neneria, Design Layout • Myrna V. de los Reyes, Circulation.

June 2013Philippine Business Report

*GNI - Gross National Income

Entered as Third-Class Mail at theMakati Central Post Offi ce

under Permit No. 504valid until 31 December 2013

0100020003000400050006000

Feb-13Jan-13Dec-12Nov-12Oct-12Sep-12

Exports(In USD Billion)

4,4004,6004,8005,0005,2005,400

Feb-13Jan-13Dec-12Nov-12Oct-12Sep-12

Imports (In USD Billion)

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GNI Growth Rate (%)

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4Q (2011) 1Q (2012) 2Q (2012) 3Q (2012) 4Q (2012) 1Q (2013)

GDP Growth Rate (%)

130.5131

131.5132

132.5133

Apr-13Mar-13Feb-13Jan-13Dec-12Nov-12

Consumer Price Index(2000 base year)

0

1

2

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4

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