1October 2016

Volume 27 No. 10 October 2016

BOI-registered investments grow two-fold

The Board of Investments (BOI) approved 192 projects worth P210.37B in the first seven months of the year, which is 98% better than the P106.08B recorded in the same period last year.

The projects, once fully operational, will generate 37,487 jobs.

The nearly two-fold increase in performance is attributed mainly to the big-ticket energy and infrastructure projects approved for the period. Energy projects, which increased by 325%, accounted for 51% of total BOI approvals.

For the month of July, major approvals included the P11.64-M El Elyon Power Plan Phils. Inc. project with a generating capacity of 160MW in Sarangani Province, and the P8.38-M Luzon Clean Water Development Corp. project, a public-private partnership (PPP) project for the Bulacan Bulk Water Supply Project (Stages 1 and 2) under the concession agreement with the Metropolitan Waterworks and Sewerage System (MWSS).

Top destinations of BOI-approved projects for the first seven months of the year were the National Capital Region (NCR) with P37.05B, Region 3 with P44.32B, and Region 4A with P28.69B. “Investments coming in are in sectors that will elevate our competitiveness such as in power and infrastructure,” Department of Trade and Industry-Industry Development Group (DTI-IDG) Undersecretary Ceferino S. Rodolfo said.

“Dispersion of investments in the regions had also changed. NCR usually receives the highest amount of investments, but now, investments are dispersed as other regions take the lead in attracting more investments,” said Ceferino, who also serves as BOI Managing Head.

DTI Secretary and BOI Chairman Ramon M. Lopez said the agency expects approved investment pledges to further grow on the back of sound economic fundamentals and sustained investor confidence. “While confidence in the economy remains with investments continuing to pour in, the government is pursuing a number of strategic investment policy and promotion initiatives in a bid to further strengthen its efforts in attracting a massive flow of domestic and foreign investments in the country particularly those that would bring in new technology,” said Lopez.

The government will synchronize the investment promotion efforts of all its investment promotion agencies (IPAs) to support Philippine branding and focus on promoting strategic investments to position the country as a world class investments destination, he said.

“Confidence in the new administration is strong, while our economic fundamentals and consumer confidence are high,” he said.

“We have a better business environment under the new administration. President Duterte’s 10-point economic agenda is a big factor to attracting investments. Part of this agenda pursues the stability of the policy environment, honoring contracts and not changing the rules midway, a big come-on for many investors,” he added.

The current investment incentives regime outlined in the Investment Priorities Plan (IPP), according to Lopez, will be modernized by proposing amendments to the 1987 Omnibus Investments Code.

“In granting incentives, we will focus on creating decent jobs in the Philippines. As such, bias against foreign investors and bias against those serving the domestic market will be removed. Further, if the economic provisions of the Constitution will be amended, greater foreign equity in sectors that are crucial to improving the competitiveness of industries such as infrastructure and utilities like telecommunications, roads, ports, and airports, may be allowed,” Lopez said.

BOI Big-Ticket Projects (January-July 2016)In Billion Pesos

Limay Premiere Power Corp. 23.30GMR Megawide Cebu Airport Corp. 16.75Bayog Wind Power Corp. 14.73Cordillera Hydroelectric Power Corp. 12.19

BOI investment approvals January-July 2015 - January-July 2016

P106.08B

P210.37B

July 2015 July 2016192

projects37,487

jobs

P P

P P

98%

Philippine Business Report2

INDUSTRYTRENDS

IPP review underwayThe Board of Investments (BOI) has started the review of the country’s Investment Priorities Plan (IPP) to trim the number of projects entitled to government incentives, Department of Trade and Industry (DTI) Secretary Ramon M. Lopez said.

The review covers all industries, activities, and projects identified in the current IPP.

“We’re working first on the basic framework. There is already an ongoing review on how we can modernize the incentive system. There are consultations being done now before we really craft the next batch of IPP,” Lopez said.

The IPP is a list of activities entitled to government incentives. Preferred activities under the existing list include manufacturing, agribusiness and fishery, services, economic and low-cost housing, hospitals, energy, public infrastructure, logistics, and public-private partnership (PPP) projects.

Among the activities that will be incentivized are Philippine firms which would incorporate the inclusive business (IB) model into their operations.

IB is a model that allows companies to engage poor and low-income communities as partners, customers, suppliers, and employees in their supply chains.

The IPP will also have a provision on least developed areas (LDAs) to boost economic activities in the rural areas and decentralize growth from the major urban centers like Metro Manila.

Based on Memorandum Circular (MC) No. 2016-003, “registered projects located in identified LDAs shall be entitled to pioneer incentives and additional deduction from taxable income equivalent to 100 percent of expenses incurred in the development of necessary and major infrastructure facilities unless otherwise specified in the IPP’s specific guidelines.”

An LDA, according to the MC, is determined based on several criteria including low per capital gross domestic product, low level of investments, high rate of unemployment and/or underemployment, and low level of infrastructure development including its accessibility to the urban centers.

Under the IPP, BOI has identified 134 LDA calamity-stricken cities and municipalities located in 14 provinces.

Any facility, project, and activity brought to these specific low-income and disaster-stricken areas would be given incentives, including tax deductions to boost economic activities there.

BOI-identified clamity-stricken LDAs(Number of cities and municipalities per province)

Leyte 28Iloilo 27Capiz 17Aklan 14Cebu 14Antique 11Negros Occidental 7Eastern Samar 4Palawan 4Western Samar 4Biliran 1Dinagat Islands 1Masbate 1Southern Leyte 1

PHL economy grew 7% in Q2 The Philippine gross domestic product (GDP) grew by 7% during the second quarter of the year, faster than the 5.9% posted a quarter ago and the 6.8% in the first quarter of last year, according to the Philippine Statistics Authority (PSA).

This brings the country’s average GDP growth in the first half to 6.9%, National Statistician Lisa Grace S. Bersales said.

The faster growth in the second quarter was attributed to election-related spending coupled with sustained robust domestic demand that bolstered manufacturing.

Business groups expect this strong performance to be sustained until year-end. Below are some of their projections for the economy for the rest of the year: l “Strong growth to be sustained

with increased government infrastructure spending, private sector construction, consumer spending and foreign direct investment inflows, and the continued growth of the business process outsourcing sector.” —Management Association of the Philippines President Perry L. Pe

l “. . . potential to grow even faster than 7% when the economy runs on all cylinders, including good infrastructure, agriculture, and responsible mining.” —American Chamber of Commerce of the Philippines Senior Adviser John D. Forbes

l “The fourth quarter may see a GDP growth that may even be higher than 7%.” —Philippine Exporters Confederation, Inc. (Philexport) President Sergio R. Ortiz-Luis Jr.

This program is in line with the “administration’s strategy to move into the medium to long term recovery and rehabilitation of areas highly affected by calamities.”

DTI hopes to come up with the first draft of the amended IPP before the end of the year.

To support the development of micro, small, and medium enterprises (MSMEs), the DTI is studying the possibility of linking the Philippine Economic Zone Authority (PEZA) and other ecozone locators with the domestic MSMEs as suppliers of raw materials, intermediate parts, and components.

BOI Top 5 Sources of Foreign InvestmentsJan-July 2016

(in billion pesos)

Country Amount Singapore 9.83 Netherlands 7.12 South Korea 6.42 Japan 5.69 British Virgin Islands 2.02

3October 2016

ICT ‘fast becoming’ PHL’s top dollar earnerThe information and communications technology (ICT) industry is fast becoming the country’s top dollar earner and its capacity to generate jobs is projected to surpass the big dollar remittances of overseas Filipino workers (OWFs), Department of Information and Communications Technology (DICT) Secretary Rodolfo A. Salalima said.

The rapid growth of the ICT industry is attributed to the emergence of hundreds of major players putting up businesses in various capital cities and towns across the country.

The “driving forces” of the industry are the information technology and business process management outsourcing (IT-BPM) firms, software developers, Internet-service providers, telecommunication companies, and educational institutions.

The IT-BPM industry, which has registered USD 19B in total revenue in the past year, is expected to generate USD 25B this year, according to Pinnacle Real Estate Consulting Services, Inc. This claim was also supported by the data from IT and Business Process Association of the Philippines (IBPAP).

Industry growth, however, is hindered by slow Internet speed given by telecommunications providers to their subscribers. Statistics indicate that the Philippines is among countries in the world that has a very poor Internet service.

Salalima said DICT plans to enter into a memorandum of understanding (MOU) with various telecommunication companies to find ways to address this problem.

DTI directs investments to agri-based sector, marginalized areasThe Department of Trade and Industry (DTI) is encouraging businessmen to direct their investments to agri-sectors and geographical priorities such as Mindanao and other marginalized areas in support of the government’s 10-point economic agenda.

DTI-Regional Operations Group (ROG) Undersecretary Zenaida Cuison-Maglaya cited government’s efforts in northern Mindanao in creating the logistical support and taking care of the economic environment in the region.

Essential to development of the region, Maglaya said, is the growth of micro, small, and medium enterprises (MSMEs) which plays a key role in the economy.

Also crucial to the development of the region, she said, is the country’s integration to the Association of Southeast Asian Nations (ASEAN) market with about 600M consumers.

Contributions of MSMEs in PHL’s economy

99.6%of all enterprises in the country

30%-43%of the country’s GDP

60%of the country’s workforce

Influx of investments from local car parts makers seenLocal automotive parts manufacturers are expected to invest an initial P1.6B to service the growth in demand from Mitsubishi Motors Philippines Corp. and Toyota Motor Philippines Corp.

PHL now EU’s top supplier of tuna The Philippines is now the top supplier of tuna (prepared as sardines) and prepared fish to the European Union (EU) as a result of more local fisheries exporting duty-free under the EU-Generalized Scheme of Preferences Plus (GSP+) scheme, Department of Trade and Industry (DTI) Secretary Ramon M. Lopez reported.

The benefits of the country’s inclusion in the EU-GSP+ are now being enjoyed by tuna canneries in General Santos City and in Zamboanga City, Lopez said.

Among the tuna exporters in the country are Alliance Select Foods International, Celebes Canning Corporation, General Tuna Corporation, Ocean Canning, Philbest Canning Corporation, Seatrade Canning Corporation, and the Zamboanga-based Permex Producers Exporters Corporation.

The government will also look for other players who are interested to invest in the telecommunications business.

The DICT plans to put up free Wi-Fi services in all public places in towns and cities across the country.

l “A healthy Philippine economy can be achieved, not only for a short term but for the long haul.” —Makati Business Club Executive Director Perter Angelo V. Perfecto

The Duterte administration targets the country’s GDP to grow by 6%-7% by the end of 2016.

as participants of the Comprehensive Automotive Resurgence Strategy (CARS) program.

Toyota and Mitsubishi will be putting in a total of P7.5B to produce their respective enrolled models, the full-model Vios and the Mirage/Mirage G4, respectively. Of the amount to be invested, 20% or P1.6B, will come from local parts suppliers.

The CARS program is the government’s initiative to attract investments, increase demand, and efficiently implement rules and regulations in the country’s automotive industry. It provides tax cuts and other incentives to vehicle makers with domestic production.

Some P27B worth of incentives will be given to local vehicle assemblers over a six-year period which is also expected to benefit the chemicals, metalworking, tool and die, plastics, electronics, rubber, glass, and textile sectors.

The program has the full support and commitment from the Philippine Parts Maker Association (PPMA), the industry association of companies manufacturing vehicle parts.

Philippine Business Report4

The Philippines, the only country in the Association of Southeast Asian Nations (ASEAN) to enjoy this scheme after EU formally accorded its beneficiary country status in December 2014, can now export more than 6,274 products to any of EU member countries at zero tariff.

A year after ratification, EU became the third largest exporting partner of the Philippines (from fourth in 2014), with exports growing by 19%. According to Eurostat, this was mostly due to an uptake in EU-GSP+ related exports, growing by 27% during the first half of 2015.

EU-GSP+ is a preferential tariff scheme granted by the EU to developing countries that meet the very stringent application requirements which include ratification of 27 international conventions on human and labor rights, environmental protection, and good governance.

Under the scheme, products with duty-free access include coconut and marine products, processed fruits, prepared food, animal and vegetable fats and oils, textiles, garments, headwear, footwear, furniture, umbrellas, and chemicals.

Secretary Lopez urged Filipino exporters to avail of this duty-free privilege since it is only good for seven years.

Lopez also urged the private sector to explore ways to assist micro, small, and medium enterprises (MSMEs) to utilize this preferential tariffs.

To help exporters understand how to avail of the EU-GSP+, the DTI has already conducted more than 80 information sessions on “Doing Business with the European Union (EU) using the Generalized System of Preferences Plus (GSP+)” in key cities and towns in the country.

It has requested the EU’s Trade Related Technical Assistance (TRTA) Project to support Philippine readiness by providing technical assistance and capacity-building for Philippine exporters to Europe.

Early this year, the Philippines has signed a free trade agreement

Factory output seen at 8% in July Philippine industrial output likely grew 8% in July following the strong performance of the 8.5% growth in June, Moody’s Analytics reported.

“Strong domestic demand and rapid economic growth will keep production increasing rapidly for the rest of 2016,” the report said.

Factory output growth is keeping in pace with the increase in gross domestic product (GDP) which accelerated to 6.9% in the first semester from 5.5% in the same period last year.

The country expects a better GDP performance in the following months as the effects of El Nino start to diminish and allow food production to pick up.

The National Economic and Development Authority (NEDA) reported that factory output, measured by the Volume of Production Index (VoPI), rose 8.5% in June, reversing a 1.7% decline in June last year.

Production output was higher in basic metals, transport equipment, machinery except electrical, rubber

Nordic-Baltic region upbeat on PHL tradeThe Nordic Chamber of Commerce of the Philippines (NordCham), formerly the Nordic Business Council Philippines (NBCP), expressed optimism that Philippine trade with the Nordic and Baltic region would double under the new administration’s 10-point economic agenda.

“We are bullish on the growth prospects of the Philippine economy. We see several areas for continued and strengthened Nordic-Philippine cooperation,” NordCham President Bo Lundqvist said.

“We are excited to see this development take place, together with changes towards ease of doing business. These are some of the key building blocks of the economic agenda of the new administration,” Lundqvist said.

NordCham Executive Director Joona Selin said total trade between the Philippines and the Nordic and Baltic region reached EUR 515M or over P27M in 2014, which remained aroundEUR 500M or P26B in 2015.

“A lot of that has to do with how we talk about the Philippines as an investment destination. There are two aspects to that, either looking at the country as a market or looking at the country as a service and delivery center,” Selin said.

NordCham promotes and facilitates trade, commerce, industry, and

DTI SecretaryRamon M. Lopez

As tariffs go down, we need to work more closely with Philippine businesses to help them navigate the rules of origin requirements and to hurdle other barriers.

“”

and plastic products, tobacco products, wood and wood products, beverages, and printing.

In terms of production value measured by the Value of Production Index (VaPI), manufacturing output indicated a turnaround in June this year by growing 4.7% from a -7.9% contraction in June 2015.

Socioeconomic Planning Secretary and NEDA Director General Ernesto M. Pernia earlier said the manufacturing sector’s performance during the period reflects sustained domestic demand.

with the European Free Trade Area (EFTA), composed of the countries Iceland, Liechtenstein, Norway, and Switzerland. EFTA, with more liberal rules of origin regime on tuna, will come into force once domestic ratifications are in place.

According to Lopez, exports to EFTA could also address concerns on the geographical distance of the market while investments in food processing, shipping, and the maritime sectors are also areas to explore, he added.

Additional information on EU-GSP+ is available at http://www.dti.gov.ph/2016-03-29-02-27-23/eu-gsp.

5October 2016

Singapore firms keen on PHL IT-BPM industryTwelve Singaporean companies expressed interested in forging partnerships with Philippine counterparts for information technology (IT)-enabled services during a business matching hosted by the Philippine Trade and Investment Center (PTIC) and the Philippine Embassy in Singapore.

The 12 Singapore companies were interested in the Philippines’ outsourcing space and the information technology and business process management (IT-BPM) sector.

“The goal is to consistently engage the Singapore business community by updating them of our latest offerings in high-growth industry sectors such as IT-BPM and helping them network with the right contacts from the Philippines,” Commercial Counselor Glenn G. Peñaranda said.

The Philippine IT-BPM sector has grown at an annual rate of 30% over a decade, faster than the growth of the global offshore services market.

The industry has diversified significantly from contact center to back office, IT, healthcare, engineering, finance and accounting, animation, and game development.

Notably, over 40 of the 2014 Fortune 1000 and other large global organizations, including those from India, have a global in-house center in the Philippines.

The country remains to be a competitive provider and destination for IT-BPM services because of its English-speaking and skilled talent pool, competitive cost, government support and record of accomplishments.

The Philippine IT-BPM Roadmap 2016 aims to generate USD 25B in revenues and 1.3M direct employees by the end of the year from USD 21.5B revenues and 1.5M employees last year.

The country is also crafting a new industry blueprint called IT-BPM Roadmap 2022 which will be a comprehensive six-year plan to chart the growth course of the industry.

This roadmap also seeks to identify how the country can continue to push more investments and job creation outside of Metro Manila.

MMPC to expand auto parts productionMitsubishi Motors Philippines Corp. (MMPC) is keen on pouring more investments in automotive parts manufacturing under the government’s Comprehensive Automotive Resurgence Strategy (CARS) Program.

MMPC is forging technical agreements with its network of suppliers to bring the local content of its entry model in the program to as much as 70%.

The company has already committed to invest P4.3B initially for the assembly of its entry model Mirage.

MMPC Vice-President Dante C. Santos said there will be additional investments from auto parts manufacturers aside from the assembly operations. As an assembler, MMPC has to comply with the mandatory production of big auto parts specified under the program.

“We have a network of 74 suppliers, these are Filipino firms with foreign partners,” Santos said.

At present, MMPC’s highest local content achievement is 70% for Adventure and L300 models, which they were able to achieve over decades of local operations.

Ayala puts in USD 100M to launch self-driving cars Ayala Corp. is bent on investing USD 100M for the manufacture of self-driving cars by 2019 as it banks on its expertise in the electronics industry.

AC Industrials President and CEO Arthur T. Tan said the conglomerate is actively in talks with four car companies for a possible joint venture in car manufacturing and expects to close a deal in two to three years.

“The Philippines can be a hub not only for ASEAN [Association of Southeast Asian Nations] but also for the world. We can build a product, design and manufacture it here in the country,” said Tan who has headed Ayala’s Integrated Microelectronics Inc. (IMI) since 2002.

“What we’re looking for is jumping to the next generation of vehicles — a PC with four wheels,” Tan said.

Tan is confident on Ayala Corp.’s direction, noting that automotive companies would need to build totally new capacities and employ electronics experts to get into the next generation of vehicles.As a strategy, Ayala Group Head for Corporate Strategy and Development Paolo F. Borromeo said automotive manufacturing is a business that translates to more jobs, which Ayala Corp. believes can help achieve inclusive growth.

In all, the Ayala Group’s automotive businesses will be under AC Industrial.

MMPC President and CEO Yoshiaki Kato said the company is on target for the Mirage timetable whose production is expected to start next year.

Under the CARS Program, each participant is required to produce 200,000 units over a six-year period to be able to fully enjoy the tax incentive package equivalent to USD 1,000 subsidy per locally produced unit.

TRADE ANDINVESTMENTS

MANUFACTURING

investment between the Philippines and the Nordic (Denmark, Finland, Iceland, Norway, Sweden) and Baltic (Estonia, Latvia, Lithuania) countries.

Areas of interest among Nordic and Baltic companies in the country are in infrastructure, renewable energy, and information and communications technology.

Philippine Business Report6

ENERGY

PUBLIC INFRASTRUCTURE

AND LOGISTICS

AGRIBUSINESS AND FISHERIES

Tadeco eyes more exports with P2-B expansionDavao-based Tagum Development Corp. (TADECO), owner of the world’s largest contiguous banana plantation, will further invest P2B in technology to increase its production amid market optimism and improved weather condition.

TADECO, the flagship company of the Anflo Management and Investment Corporation (ANFLOCOR) Group of Companies, is exploring investment opportunities outside Panabo City, where its 7,500-ha. of banana plantation is located.

“To date, our banana expansion program is nearing a commitment worth P1.5B while the first phase of our new pineapple project will cost P1.2B, an investment in a very depressed and impoverished area in Mindanao,” ANFLOCOR President and CEO Alexander N. Valoria said.

Panabo City is currently the “Banana Capital of the Philippines” due to the number of banana plantations throughout the city.

TADECO Vice President for Operations Alexis P. Cantil said the company is hoping to produce and ship 30.9M boxes of Cavendish banana this year, or equivalent to 417,015 metric tons (MT).

TADECO is engaged in the production and export of fresh Cavendish bananas to New Zealand, Japan, Hong Kong, Korea, China, Korea, United Arab Emirates, Russia, Malaysia, and Singapore under the Del Monte and DOLE brand names.

The Philippines is currently the second largest exporter of banana, next to Ecuador. Bulk of the country’s supply comes from Mindanao.

IFC invests USD 161M in 3 projects The International Finance Corp. (IFC) is pouring USD 161M in three biomass

power projects in Negros Occidental to generate 70 megawatts (MW) of renewable energy.

IFC said the power plants are being built by Bronzeoak Philippines and ThomasLloyd Group Ltd. in the municipalities of La Carlota, Manapla, and San Carlos in the said province, which are expected to convert waste from sugarcane into electricity.

“Before it was identified as feedstock for biomass power plants, sugarcane waste was burned in the fields, a practice that contributed to air pollution,” the IFC said.

According to the IFC, the three power plants are seen qualifying for the Energy Regulatory Commission’s biomass feed-in-tariff scheme.

Bronzeoak Philippines CEO Jose Maria T. Zabaleta said the projects will utilize agricultural waste to generate reliable base load power, providing additional income to farmers, reducing fertilizer costs, and helping contribute to a healthful ecology.

For his part, ThomasLloyd Group Executive Director Tony Coveney said the use of local sugar cane waste makes it an exciting development for all the stakeholders, especially for the local community.

DMCI spends P600M for Palawan power plantDMCI Power Corp. (DPC), the off-grid energy arm of DMCI Holdings, is investing P600M for the establishment of two units of a bunker-fired power plant, each with a capacity of 4.95 megawatts, in Aborlan, Palawan.

The new plant is expected to start operations by year-end.

LRMC starts installing new rails on LRT Line 1The Light Rail Manila Corp. (LRMC) has started installing new rails on the Light Rail Transit Line 1 (LRT-1) tracks to increase maximum train speed to 60 kph from the current 40 kph.

The rail replacement project, starting from Baclaran Station in Pasay City to 5th Avenue Station in Caloocan City, is the final phase of the rehabilitation of the 32-year-old train line.

LRMC, the consortium of Ayala Corp., Metro Pacific Light Rail Corp., and Macquarie Infrastructure Holdings (Philippines) Pte. Ltd., said the rail replacement project covers 21 km. on the northbound route and 5 km. on the southbound route.

MNTC to invest P1.1B in toll roadsManila North Tollways Corp. (MNTC)has set aside P1.14B for the expansion of major toll plazas at North Luzon Expressway (NLEx) and Subic-Clark-Tarlac Expressway (SCTEx).

The toll road operator said it will spend P232M to expand the Bocaue toll barrier by constructing eight more lanes, from the current 25 toll lanes to 33 toll lanes.

Also, the Balintawak toll barrier will be expanded from the existing 16 lanes to 23 lanes at a budget of P176M.

IFC Country ManagerYuan Xu

Converting agricultural waste to biomass power is a sustainable way of creating economic value while caring for the environment,

“”

DPC President Nestor D. Dadivas said the investment in Aborlan will address the continuing increase in electricity demand in the province due to the rise of local tourism and commercial establishments.

DPC was established in 2006 to provide electricity to areas that are not connected to the main grid.

Aside from Palawan, the company also provides power to the provinces of Masbate, Oriental Mindoro, and Sultan Kudarat through supply contracts with electric cooperatives.

7October 2016

MNTC said three new lanes in a fishbone scheme would be constructed at NLEx Mindanao Avenue amounting to P32M.

The Mindanao toll plaza, which opened in 2010, has been a useful alternative entry to and exit from NLEx from Quezon City.

The Mabiga Interchange, on the other hand, will have two new toll plazas with two toll lanes each, amounting to P75M. Two lanes will also be added to the Subic-Tipo toll barrier at a cost of P70M.

The San Fernando Interchange is also up for a P287-M improvement as part of the second phase of the NLEx road widening.

Moreover, the Meycauayan Interchange will undergo a P154-M upgrade, which includes the relocation of the southbound toll plaza and signalization of the east rotunda.

ICTSI, NALP open Laguna storage facilityInternational Container Terminal Services, Inc. (ICTSI) and NYK Auto Logistics Philippines (NALP) installed a 5,000-sqm. storage facility in Cabuyao, Laguna last month. The discharged completely assembled units (CBUs) from its subsidiary Bauan International Port, Inc. (BIPI) will be directed to the company’s initial covered warehouse, where 2,800 CBUs can be stored.

Cabuyao City Mayor Rommel A. Gecolea said the new facility will create new job opportunities for the local community and nearby cities.

ICTSI currently owns 30 terminals in 21 countries, of which nine are located in the Philippines.

BANKING

BPI buys stake in Rizal Bank Inc.The Bank of the Philippine Islands (BPI) bought a 10-% stake from rural bank Rizal Bank Inc. (RBI).

The signing was led by BPI Chairman Jaime Augusto Zobel de Ayala,

along with BPI President and Chief Executive Officer (CEO) Cezar P. Consing, RBI Chair Flordeliza L. Sarmiento, CARD Inc. Chairman Jaime Aristotle B. Alip, and incoming RBI President and CEO Elma B. Valenzuela.

Through the partnership, BPI becomes the exclusive local equity partner in CARD Mutually Reinforcing Institutions (MRI) Banking Group. This helps the Ayala-led bank deepen its reach in the microfinance space, targeting unserved and underserved Filipinos.

RBI is a member of the CARD MRI, a group of organizations specializing in microfinance, microinsurance, information technology, business development, pharmacy, and community development.

Data shows that RBI has assets amounting to P1.32B as of end-June 2016. It was able to disburse P956.47M worth of loans and has P772.89M worth of total deposits.

According to Sarmiento, RBI’s stakeholders include the poorest of the Filipinos by providing them access to microfinance loans and savings.

“Having BPI as our partner will open opportunities for us to expand and further improve our services for the socio-economically challenged families. This is consistent with our goal of reaching more families by providing a client-focused and financially inclusive products and services,” Sarmiento said.

Union Bank partners with Lombard OdierTo serve their upscale clients, Union Bank signed a cooperation agreement with Swiss bank Lombard Odier last August.

This partnership is in line with Union Bank’s goal to offer a more customized wealth management, one that is more focused on risk, Union Bank Senior Vice President and General Counsel Joselito V. Banaag.

The bank said that they want to deviate from the common wealth management practice in the country

of usually pushing products and chasing yields. They seek to assess their client’s risk appetite and offer a service based on it.

Union Bank has assets accounting to P439B as of end-June 2016. It was able to post a 30-% increase in net income from P3B last year to P3.9B to the same period this year.

Lombard Odier, on the other hand, is considered to be one of the most capitalized banks globally, having almost 13.5% capital equity.

IT-BPM

Xerox PHL to hire 800 more workersAs part of its expansion program, Xerox PHL seeks to hire 800 more workers by the end of 2016 for its eight facilities in Metro Manila and Cebu City.

“We’re very satisfied with the performance of our existing operations in Metro Manila and Cebu and because of that, we wanted to further grow the business that we have in the Philippines,” Xerox PHL Country Director Jojo B. Gajitos said.

Xerox, which has been operating in the country since 2005, employs 8,000 Filipinos, handling the company’s customer care and finance and accounting operations.

According to Gajitos, the company’s strict hiring procedures emphasize its goal to recruit and retain a highly skilled and motivated workforce.

“We treat employees as business partners and we are committed to investing in them. Quality training and development programs are in place to help them improve their skills and advance their careers,” he added.

The company operates its Xerox Services University that provides an online database of training modules and reference materials, exclusively for its employees.

Philippine Business Report8

REAL ESTATE

BackOffice opens delivery center in PHLUnited States (U.S.)-based data management company BackOffice Associates LLC partnered with local information technology consultancy company Third Pillar Business Applications Inc. to open a global delivery center in Ortigas Center, Metro Manila.

“The Philippines is the new and largest market outside Singapore and Australia, where BackOffice’s headquarters are located,” BackOffice Associates Chief Executive for Asia Pacific, Japan, and the Middle East Kriss Datta said.

Third Pillar President and Chief Executive Officer Jennifer S. Ligones said BackOffice’s decision to open an office in the country will contribute to Third Pillar’s efforts to provide a solid foundation for business services among enterprises in the country.

Datta added that their office in the Philippines will also help local companies save millions of dollars from data quality management.

NTT expands in PHLNTT Group projects faster growth for its information technology (IT) consulting and learning arm in the Philippines, after acquiring Filipino firm Wizardsgroup, Inc. earlier this year.

Wizardsgroup, recently renamed to NTT Data Philippines, Inc., expects its revenue to double in the next five years.

Wizardsgroup has advanced capabilities on Microsoft technology and Oracle that can offer advanced analytics services to business

NTT Data Asia-Pacific ChairmanRyoji Fukaya

The Philippines is the most promising market as far as growth is concerned,

“ ”

Megaworld readies P5B for three new hotelsTo boost its income, Megaworld allots P5B to build three new hotels to be located in Boracay, Cebu, and Manila. The three additional hotels are under the firm’s newest hotel brand, Savoy Hotel.

The hotels will include a 530-room hotel in Megaworld’s Boracay Newcoast by end-2016, envisioned to be a first class resort hotel. It will be located in the eastern part of the island, overlooking the Sibuyan Sea.

The second will be built in the 25-ha. Newport Plaza in Pasay City composed of 684 rooms.

The third on the list will be the 18-story, 547-room hotel in the Mactan Newtown in Lapu-lapu City, Cebu to be opened in 2018.

“[The] rapid expansion of our very own hotel brands is an indication of Megaworld’s diversification as a real estate company, and at the same time, our commitment to support the country’s tourism industry,” Megaworld Senior Vice President Jericho P. Go said.

First PEZA-accredited IT park in Northern Panay inauguratedThe first Philippine Economic Zone Authority (PEZA)-registered information technology (IT) park in Northern Panay Island was formally inaugurated as

global outsourcing firm ePerformax commenced the construction of its facility within the zone.

The 7.4-ha. Pueblo de Panay TechnoPark is part of Pueblo de Panay Township, a 500-ha. mixed-use integrated community in Western Visayas and is considered one of the biggest township developments in the country.

Pueblo de Panay, Inc. (PDPI), the developer of both the TechnoPark and the township, partnered with ePerformax through a contract signing and groundbreaking ceremony.

“We are partnering with our locators, the local government units, national government agencies, the academe, the business sector, and other stakeholders in our community to provide local employment,” PDPI President and Chief Executive Officer (CEO) Jose Nery D. Ong said.

As the first locator at the TechnoPark, ePerformax will initially build a five-story building scheduled for completion in October next year. This facility will house its client operations and a training center for Global Communications and Management Academy (GCMA).

“We are not simply building a call center where representatives answer phones and provide basic customer care. The future of BPO in the Philippines is going to require highly trained professionals who can consult with customers on complex subjects such as travel arrangements or financial planning,” ePerformax President and CEO Teresa D. Hartsaw said.

“What we want to build here in Roxas City is the next generation of BPO [business process outsourcing] that provides solid professional careers for people instead of the more transaction-based customer service jobs,” she added.

Roxas City has been declared by the IT and Business Process Association of the Philippines (IBPAP) as one of the emerging locations for IT and business process management (IT-BPM) investments in the Philippines for 2015-2016.

In 2016, Xerox was named as Business Process Leader by the Everest Group. It was also listed in the World’s Most Admired Companies by Fortune Magazine in 2015.

“We believe that the positive growth of our business in the Philippines is a result of the collective efforts of our people,” Gajitos said.

clients, especially in telecom, financial services, healthcare, and automotive.

NTT Data Philippines President and CEO Pocholo S. Reyes said that they are pursuing to increase revenue by about 20% annually in the next five years.

9October 2016

PLDT launches new InnoLab in MakatiAfter establishing six Innovation Labs (InnoLab) in the country, the Philippine Long Distance Telephone Company (PLDT) recently launched its seventh InnoLab in Makati City.

The first six facilities were established in the cities of Manila, Clark, Subic, Cebu, Davao, and Baguio. It will be located along Makati’s central business district, inside PLDT’s data center equipped with intensive security system and disaster-resilient infrastructure.

A PLDT InnoLab is a facility where innovative products and business solutions are being tested and developed. This is also where field experts conduct trainings and provides information and communication technology (ICT) services and technical assistance to its clients.

It addresses needs of different clients including software and gaming industries, academe, telecom industry, and service providers in government agencies.

“In these times of mind-boggling advances in technology, Innolab is the perfect avenue to identify trends and business models, and facilitate mutually beneficial exchanges within the dynamic digital community,” PLDT Vice President for ICT Research and Development Joey S. Limjap said.

TELECOM

Huawei projects positive growth in PHLHuawei Technologies Philippines, Inc. sees a positive growth outlook for its business in the Philippines, as telecom companies invest in the improvement of their network to address the increasing demand for data services.

“I think we have a lot of opportunities in this market,” Huawei Technologies Philippines CEO Jacky Gao said.

The increasing demand for data services in the country is expected to open up opportunities for the company to grow. This is because telco players are investing more in the improvement of their network coverage in order to address their subscribers’ needs.

Huawei is currently providing assistance to Smart Communications, Inc. and to Globe Telecom, Inc. in improving their networks.

Additionally, the expected rise in use of 4G or LTE (Long Term Evolution) is also expected to open up more opportunities for the company. Despite the present number of 4G smartphone users in the country, Gao said the percentage is seen to grow in the next years, as this type of smartphones gets more affordable and accessible.

Globe to activate more cell sites To improve its mobile services, Globe Telecom Inc. seeks to activate more than 500 cell sites by the end of the year through accelerating the rollout of Long Term Evolution (LTE) service using the 700-MHz frequency.

“We are confident that more and more of our customers will experience improved services as adoption of LTE-capable devices increases and as we continue to deploy LTE 700 in more sites. This is consistent with our strategy of continuously improving internet services using the previously idle 700-MHz spectrum that the NTC [National Telecommunications Commission] now allowed us to co-use,” Globe Senior Vice President for Program Governance and Network Technical Group Joel R. Agustin said in a statement.

Majority of these sites will be located in Metro Manila, covering major business districts, as well as highly urbanized and populated areas, where the number of LTE 700 users is also increasing.

Globe activated its first 700-MHz cell site in Quezon City which is now covered by the technology.

COMPANY NOTES

URC to buy Snack Brands for USD 458MGokongwei-led Universal Robina Corp. (URC) plans to acquire snack food manufacturer Consolidated Snacks Pty Ltd. (CSPL) for USD 458M to expand its reach in Oceania and secure a foothold in the highly competitive Australian food and retailing market.

URC, through its wholly owned offshore subsidiary URC International Co. Ltd., will buy 100% of CSPL through a cash-free, debt-free deal. This means the target company to be acquired will retire all its debts and take all cash out upon completion.

CSPL trades under the company name Snackbrands Australia (SBA), the second largest player in salty snacks with a total market share of close to 30% in Australia.

With its wide portfolio of chips including iconic brands like Kettles, Thins, CC’s, and Cheezels, the company is the preferred private label supplier and partner of major Australian retailers.

URC Chief Executive Office Lance Y. Gokongwei said the addition of SBA into the URC organization would further enhance the innovation capability of the company.

For his part, SBA Chief Executive Officer Paul Musgrave said he was looking forward to sharing learnings, innovation, and technology opportunities with the broader URC business.

“What this achieves for the business is to take Australian manufactured product, with its distinct food security advantage, into Asian markets with the benefit of an established distribution force,” Musgrave said.

SM to open seven malls in 2017SM Prime Holdings Incorporated plans to open seven new shopping malls

Philippine Business Report10

COUNTRY TO COUNTRY

INTERNATIONALAND REGIONALWATCH

New Shopping Malls to be opened in 2017

Mall SM Premier Cagayan de Oro SM Puerto Princesa SM Urdaneta SM Center Ormoc SM Tuguegarao Cherry SM AntipoloSM Lemery

Land Area (in sqm) 81,133

65,073 46,570 28,408 25,890 22,777 24,079

PHL, UK strengthen bilateral relationsDepartment of Trade and Industry (DTI) Secretary Ramon M. Lopez and British Trade Envoy to the Philippines Richard Graham met in August to discuss expansion of bilateral trade and investment relations between the Philippines and the United Kingdom (UK).

Lopez asked the UK government for increased engagement in key areas of cooperation, specifically in capacitating and mainstreaming micro, small, and medium enterprises (MSMEs) into the value chain, in promoting a more enabled environment for countryside development, and in creating social enterprises.

He mentioned the 10-point economic agenda of President Rodrigo Roa Duterte and how it is aligned with the DTI’s priorities.

“When we talk about inclusive business, we mean that big businesses will consider MSMEs as part of the bigger picture. MSMEs in the value chain would prove cost-efficient, especially since big businesses would now look into a pool of direct supply sources that offer unique, innovative and competitive products,” Lopez noted.

Graham assured the country that it will do its best to help Filipino businessmen find opportunities to work with British businesses, as well as provide assistance in updating the country’s transportation needs and consumer franchising measures.

PHL, Laos to boost ties on trade, educationTo strengthen economic partnership between the Philippines and Alos, President Rodrigo Roa Duterte and Laos Prime Minister Thongloun Sisoulith signed an agreement during a bilateral meeting on the sidelines of the Association of Southeast Asian Nations (ASEAN) conference on 6 September 2016 in Vientiane, Laos.

Both parties agreed to work closely to enrich the relations including in the areas of education and trade and investments.

“The President expressed his interest to send a trade and investment delegation to Laos to look into business opportunities,” according to a Malacañang statement.

In 2008, the country and Laos signed a memorandum of understanding (MOU) establishing the Philippines-Laos Joint Commission for Bilateral Cooperation. It seeks to ease consultations and cooperation in various fields like economics, health, education, agriculture, forestry, and environment.

Doing business in Asia getting easierDoing business in the Asia-Pacific, including the Philippines, has now become easier compared to 10 years ago, according to the Asia-Pacific Economic Cooperation (APEC) Policy Support Unit’s assessment. The analysis focused on the five priority areas identified by the World Bank in its Ease of Doing Business index.

“APEC data showed there was significant progress achieved in terms of reducing the time it would take to start a business, revealing a “remarkable 47.4% improvement,” APEC Policy Support Unit Senior Analyst Carlos Kuriyama said.

Also, the average time to start a business went down by almost two weeks from 28 days to 15 days.

In particular, the Philippines has significant gains in streamlining processes to help ease doing business in the country.

The Department of Trade and Industry (DTI), the Department of Interior and Local Government (DILG), and the Department of Information and Communications Technology (DICT) have already issued a joint circular memorandum that will strongly encourage all local government units (LGUs) to streamline and standardize their respective processes.

Priority Areas in World Bank’s Ease of Doing Business index

starting a business

dealing with construction

permits

gettingcredit

trading across borders

enforcingcontracts

next year as part of its continuous expansion in provincial areas.

The projects will add 293,930 sqm. to the company’s leasable space, bringing its total mall leasable area to 7.95M sqm. By end-2017, SM Prime will have 67 malls nationwide.

Currently, SM Prime has a total of 59 malls in the Philippines and six in China. The company is scheduled to open one more mall before the end of 2016—SM City East Ortigas in Pasig City—to end the year with 60 malls.

DTI SecretaryRamon M. Lopez

The intention of the agenda is clear-cut: to pursue a quality of growth that will result in shared prosperity among our people,

“”

11October 2016

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DTI steps up awareness campaign on AEC and FTAsThe Department of Trade and Industry (DTI) ramped up its efforts in informing local entrepreneurs and other stakeholders of the benefits under the ASEAN Economic Community (AEC), various free trade agreements (FTAs), and preferential schemes.

“We are increasing the frequency of our information and education drive and casting a wider net by continuing to conduct various fora and discussions in the regions. The knowledge our stakeholders, particularly micro, small, and medium enterprises (MSMEs), will gain from our initiatives will help us fully utilize our trade engagements and enhance our foothold in the regional and global market,” said DTI Secretary Ramon M. Lopez. The DTI provides entrepreneurs with knowledge on how to navigate and profit from the country’s FTAs through its Doing Business in Free Trade Areas (DBFTA) seminars which discusses market opportunities, tariff reductions, rules of origin (ROO), and customs procedures. “It is imperative for our stakeholders to be aware, involved and globally competitive. Our aim is not just to reduce trepidation among our industry sectors, but also to enable them to participate more actively in international trade,” Lopez said.

From November 2010 to July 2016, DTI conducted 964 information sessions attended by more than 100,000 participants from the private sector, academe, and other government agencies.

These sessions focused on topics such as FTAs, AEC, Philippine-European Free Trade Association (EFTA), European Union Generalized System of Preferences Plus (EU-GSP+), and the United States Generalized System of Preferences (US-GSP). The DTI also holds consultations through the One Country, One Voice (OCOV) Program that was launched in 2011. OCOV is a consultation initiative with stakeholders, particularly national government agencies, local government units, business support organizations, civil society organizations, and the private sector, intended to formulate trade policies. OCOV seeks to obtain counsels and assessments on the Philippines’ trade objectives, priorities, and necessary undertakings to arrive at rational, sound and balanced trade policies in pursuit of national development. To date, consultations were conducted in key cities in the country particularly on the country’s trade engagements with Japan, EU, and EFTA.

Through the Industry Roadmaps Localization Program and the AEC Gameplan, a multi-sector conference conducted across the regions, the Board of Investments (BOI) also continues to capacitate industry players on how they can take advantage of the many opportunities in the AEC market by crafting their localized version of national industry roadmaps to achieve further competitiveness.

More information on the conduct of DBFTA can be accessed at http://www.dti.gov.ph/dbfta.

“Hopefully we will have standardized processes for business permit and license application. The average number of days to do all these would be eight days, down from more than 30 days. Our objective is to bring it further down to three days by streamlining the number of forms and signatories,” DTI Secretary Ramon M. Lopez said.

“After streamlining, the next move would be to automate the processes to bring down further the number of days from three to one day,” he added.

These initiatives are part of President Rodrigo R. Duterte’s mandate on creating a more helpful business environment for investors.

Southeast Asian Nations (ASEAN), including the Philippines.

The second annual EU-ASEAN Business Sentiment Survey, which polled more than 200 executives from European companies around South East Asia, revealed that majority or nearly three-quarters (74%) of European businesses project a rise in ASEAN profits for 2016 and almost three-quarters (74%) expect ASEAN’s importance to global revenues to increase over the next five years.

European businesses are increasing their investments in the region. Nearly two thirds plan to expand operations and employment in the ASEAN region, and 85% are planning to increase their regional trade and investments.

“It is clear that European business are optimistic and are investing for future growth in ASEAN. At a challenging time for the global economy, Southeast Asia is an economic bright spot and European companies are keen to invest in the region’s rapidly developing consumer market and increasingly integrated production base,” EU-ABC Chairman Donald Kanak said.

On the same note, DTI-Industry Development Group (IDG) Undersecretary and Board of Investments (BOI) Managing Head Ceferino S. Rodolfo cited the “Three Pillars Strategy” of the Philippines for Europe, through the EU GSP+, PH-EU FTA, and PH-EFTA, as huge opportunities that EU companies investing in the country may take advantage of.

EU businesses planning to expand in ASEANEuropean businesses are planning to expand their investment and operations in the Association of

Philippine Business Report12

P u b l i s h e d m o n t h l y b y t h e K n o w l e d g e M a n a g e m e n t a n d I n f o r m a t i o n S e r v i c e , D e p a r t m e n t o f T r a d e a n d I n d u s t r y, 5 F T r a d e a n d I n d u s t r y B u i l d i n g , 3 6 1 S e n . G i l J . P u y a t A v e n u e , M a k a t i C i t y 1 2 0 0 , P h i l i p p i n e s • P h o n e ( + 6 3 2 ) 7 5 1 . 3 5 6 5 • F a x ( + 6 3 2 ) 8 9 5 . 6 4 8 7 • To s u b s c r i b e , e - M a i l : p u b l i c a t i o n s @ d t i . g o v . p h • w w w . d t i . g o v . p h

Editorial Team: Dir. Patricia May M. Abejo/Editor-in-Chief • Alfonso M. Valenzuela/Managing Editor • Cresenciano P. Par/Assistant Editor • Kristina S. Andaya, Renaldo C. Neneria, Zarrel M. Noza, Airiz A. Casta/Writers • Zarrel M. Noza/Design Layout • Ric A. Kagahastian/Circulation Officer •

Philippine Business ReportOctober 2016

Entered as Third-Class Mail at theMakati Central Post Office

under Permit No. 504valid until 31 December 2016

Sources: Bangko Sentral ng Pilipinas (BSP) and Philippine Statistics Authority (PSA)

ECONOMICINDICATORS

GNI Growth rate (%)876543210

1Q(2015) 2Q(2015) 3Q(2015) 4Q(2015) 1Q(2016) 2Q(2016)

GDP Growth rate (%)876543210

1Q(2015) 2Q(2015) 3Q(2015) 4Q(2015) 1Q(2016) 2Q(2016)

Consumer Price Index (%)(2000 base year)

145144.5

144143.5

143142.5

142Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16

Imports(In USD Billion)

8000

6000

4000

2000

0Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16

Inflation Rate (%)

2

2.5

1.5

1

0.5Apr-16 May-16 Aug-16Jul-16Jun-16 Sep-16

(2006 base year) As of 29 July 2016

Interest Rate (%)8

6

4

2

0Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16

(Overnight lending facility as of September 2016)

Facebook: DTI.Philippines Twitter: @DTIPhilippines Instagram: @DTI.PhilippinesConnect with us:

Exports(In USD Billion)

48005000

4600440042004000

Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16

Peso per US Dollar Rate

4848.5

49

47.547

46.546

May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16

As of 13 October 2016