Two big wins for the Philippines’ Clark International Airport: FedEx will return to the Philippines and plans to use the airport as its hub, while surging low-cost carrier AirAsia will build a passenger base there for its new local affiliate, AirAsia Philippines.
At 2,367-hectares, Clark International Airport is about four times the size of Ninoy Aquino International Airport in Manila, about 90 minutes’ drive away. It is located within the Clark Freeport Zone and industrial area on the site of a former US military base.
AirAsia Philippines plans to start flying in October to Hong Kong, Macau, Singapore and Bangkok with a fleet of four aircraft, before expanding out to other Asian destinations. Its parent company, AirAsia, already flies between Clark and Kuala Lumpur and Kota Kinabalu, which will continue alongside the new services.
FedEx’s main Asian hub is at Baiyun International Airport in Guangzhou, and is the company’s largest outside the United States. Before relocating there, it operated out of another Philippines economic zone (and former US base) at Subic Bay but found itself unable to expand operations to meet customer demand. The loss of FedEx was a blow to the Subic Bay and administrator Subic Bay Metropolitan Authority, which lost 600 jobs and around P160 million (US$3.76 million) a year in revenues.
The Philippines Economic Zone Authority (PEZA) said investment in its special economic zones was worth P70 billion ($1.66 billion) as of this year. That’s a 38% growth on the previous year, and PEZA has a target of a further 10% growth this year on the back of growing confidence.
PEZA manages over 240 special economic zones across the Philippines, from areas the size of former US military bases to single buildings. PEZA-accredited zones have access to favorable investment conditions like tax holidays, relaxation of planning and other regulations, and easy access to trained staff and business services. The zones are aimed at export industries, usually in manufacturing or technology.
Initially popular in China and India, other countries have seen the benefits and zones with special economic conditions now operate in Indonesia, Malaysia, Vietnam and Thailand. Trade bodies like JETRO in Japan routinely conduct surveys into special zones in different countries and supply the information to potential investors.
PEZA director-general Lilia De Lima said the Philippines had a healthy supply of qualified engineers and remained cost-competitive compared to other free zones in Asia. The zones had created 790,831 new Filipino jobs, up 17.7% on last year’s figures.
source & article: philstar.com
With Indonesia on track to achieve investment-grade credit rating by the end of 2011, it’s time to look at another large Southeast Asian economy looking to follow suit. The Philippines Department of Finance is confident the country can achieve the same investment-class rating by 2013, after a budget surplus and government measures to reduce spending.
Fitch Ratings raised the Philippines long-term foreign currency bond rating from BB to BB+, one step below investment grade, while Moody’s Investors Service raised its rating on foreign and local currency bonds from Ba3 to Ba2. Philippines Finance Secretary Cesar V. Purisima said it was a historic fourth positive action on the country’s credit rating since the Aquino administration began 11 months ago.
Higher credit ratings lower the price of debt, allowing the government to borrow more efficiently to finance infrastructure and other projects. Investment grade also opens the doors to large institutional investors (such as pension funds) from wealthy countries, who are often blocked by law or internal rules from investing in anything below the grade.
The new administration has an agenda to improve the Philippines financial image abroad with initiatives to cut spending, combat corruption and promote fiscal sustainability. The central bank, Bangko Sentral ng Pilipinas, has also promised to play its part in keeping prices stable, maintaining growth and insuring against external shocks through sound monetary policy.
source & article: mb.com.ph
The Philippines Department of Trade and Industry (DTI) is keen to expand business links in New Zealand after holding information sessions in Auckland and Wellington this week. It identified key export industries like ship-building, backroom engineering design, nursing/healthcare and other skilled business outsourcing functions as key targets for NZ investment.
Attendees were also interested in the food trade, with the Philippines offering mangoes, coco sugar and coconut oil and New Zealand looking to export its honey and ice cream. New Zealand’s 40,000 resident Filipinos would provide a ready-made market for exports.
The Philippines and New Zealand are already covered by the Asean Australia-New Zealand Free Trade Agreement (AANZFTA), which began January 2010 and allows Philippine goods to enter New Zealand tax-free until 2020. The information sessions were part of a DTI project designed to highlight opportunities for the Philippines under current agreements, called the ‘Doing Business in Free Trade Areas’ (DBFTA) Program. As well as AANZFTA, the Philippines also has free trade agreements with China, Japan, Korea, and recently signed with India.
Major foreign investors have challenged the Aquino government of the Philippines to make conditions for public-private partnerships (PPP) more secure, saying they would keen to sign up for the projects but not while some terms remained unclear.
Representatives from Chambers of Commerce of the United States, European Union and Japan said they were behind the PPPs “one hundred per cent,” but that the Philippines needed to do more to secure business’ confidence that the country is now a safe place to invest money.
Austen Chamberlain of the Philippines’ American Chamber of Commerce in the Philippines said “You want to be confident that you’ll get your return, that someone’s not going to cancel your contract, that someone’s going to increase your expenses without you knowing it.”
The representatives also called for faster action on new partnerships, 10 of which are transport infrastructure projects scheduled to begin this year but are still waiting to be finalized. The new government is also reviewing some PPPs formed under the previous administration, making other investors nervous.
According to the Manila Times, the 10 private-public partnerships due to begin in 2011 are:
the P70 billion South extension of the Light Right Transit Line 1; P11.3 billion East extension of LRT 2; P7.7-billion privatization of LRT 1; P6.3 billion privatization of the Metro Rail Transit Line 3; P11.8-billion Cavite-Laguna Expressway; P10.6 billion second phase of the Ninoy Aquino International Airport Expressway; P7.6 billion New Bohol Airport; P7.5 billion Puerto Princesa Airport; P3.2 billion new Legaspi (Daraga) Airport; and the P1.5 billion privatization of the Laguindingan Airport.
($US1 = P43.52)
source & article: The Manila Times
Services exports, including business process outsourcing (BPO) have dramatically increased their contribution to the Philippines’ economy in the past decade, allowing it to become the world’s third largest provider with 15% of the global market, after India (37%) and Canada (27%).
Worth only 9% of the Philippines’ exports in 1999, the services sector grew an average of 3.6% per year and represented 21% in 2009. At a services conference in Makati City this wee, one World Bank representative called the growth “a tremendous achievement” while another said the Philippines’ quality human capital and reliable telecommunications infrastructure aided the progress.
The Philippines has also been a net exporter of services since 2006, a rarity in the developing world. The World Bank said the country has provided and “enabling environment” for the services sector, which could provide more channels for sustained economic growth and reduce poverty.
source & article: PhilStar.com
Filipinos are more optimistic about their financial future and had better access to education, but still have a lot to learn about banking and financial habits, according to a survey by international financial services group Citi.
The group’s annual ‘Fin-Q’ (Financial Quotient) survey consists of 40 questions and measures attitudes towards financial decision-making and financial habits. The Philippines recorded a Fin-Q score of only 48.5 out of 100–a little lower than last’s year’s 49 but higher than previous years, including 46.6 in 2008.
There were more encouraging signs too: 82% of respondents expressed optimism about their financial future, 71% thought they were better off than their parents at the same age, and 56% said they understood how much they needed to set aside for the future in savings. Optimism was highest among Filipinos earning P700,000 (US$16,240) or more a year.
69% also said their credit card played “an important role in helping manage finances” and 48% paid off their outstanding balance every month. Though 40% said they were confident they had enough savings to support them for three months, the Philippines average savings reserve was only about nine weeks’ worth.
Citi said despite the overall Fin-Q score remaining low, the results showed Filipinos were getting better access to financial education, improving their financial literacy, and that attitudes and behavior towards finances in the country were improving.
source & article: Citi, The Philippine Star
The Philippines economy actually grew 7.6% and not the 7.3% originally reported, says its government. President Benigno Aquino announced the news yesterday at a government forum, saying the original figure was ‘a mistake’.
This is, though, the kind of mistake you want to see in the headlines. Even the original figure marked the Philippines’ highest annual growth since 1986, when the Marcos regime was overthrown and democracy restored. It’s also a huge increase on 2009′s figure of 0.9%.
The growth is another sign of worldwide recover from the global financial crisis, but also signals investor confidence in the Philippines new administration, which came to power last year with promises to fight corruption.
source & article: Channel NewsAsia
Representatives from one of Australia’s ‘big four’ banks, the Australia and New Zealand Banking Group Ltd (ANZ-BGL) met with Philippines President Benigno Aquino recently, making a commitment to ‘support, develop and expand the Australia-New Zealand business community in the Philippines’.
In the immediate future, this involves expanding ANZ-BGL’s Philippines call center operation, which currently employs 400 Filipinos. Expansion could see another center opened and staff increased to 2000. ANZ-BGL’s CEO Michael Smith also met with Philippines Finance Secretary Cesar Purisima and Trade Undersecretary Zenaida Maglaya.
There have been other rumblings lately of a desire to develop the Philippines as a regional financial services hub. Multinational Johnson & Johnson just opened a Global Financial Services Center (GFS) at its headquarters in Parañaque City. According to Vice President and Finance and CFO Dominic Caruso, the center would “provide high-quality and cost-effective transactional processing and financial reporting services under global governance, executed at a global, regional, and country level as required.” He also praised the level of training and work ethic of the local workforce.
It’s been hinted before that Southeast Asian economies might benefit from Japanese investors and manufacturers looking to diversify their interests after March’s disasters. Apparently many are traveling to the Philippines on fact-finding missions, attracted by the country’s prices, proximity to Japan and a skilled, English-speaking workforce.
Many Japanese companies already have a presence in the Philippines and it’s long been a popular destination for Japanese tourists. Local tourism bodies plus trade and investment boards should capitalize on the opportunity to attract Japanese investment that would otherwise go to countries like Vietnam or Thailand, said a government official.
This includes hundreds of small and medium sized enterprises in the northeastern Tohoku region that were completely wiped out by March’s tsunami, as well as others whose operations were damaged but were seeking to hedge against any similar future disasters. Sergio Ortez-Luis Jr, head of the Philippines Chamber of Commerce & Industry (PCCI), said if the Philippines could promote itself as a safe and attractive tourist destination for Japanese, then investment would follow.
source & article: Philippines Daily Inquirer