President's Report

The Annual General Meeting

The Council’s 2010 Annual General Meeting took place on Thursday 31 March 2011. The following officers and members of the Executive Committee were re-elected/elected at that meeting:
 
President :  Millie Telan
Vice President (NSW):  Richard Mann
Vice President (VIC):  Gavan Collery
Honorary Treasurer:  Eduard Alcordo
Honorary Secretary:  Graham Gulliver (newly elected)
Executive Committee members:
Rene Benitez
John Ching (newly elected)
Clive Troy
John Zissis (newly elected)
 
Xavier Ugarte, the Council’s Honorary Secretary for 2009 and 2010, preferred to remain as a member without being in the Executive Committee. On behalf of the Council, I thank Xavier for his valuable contributions to the running of the Council during those years and for his commitment to continue to support the Council.
 
Graham Gulliver is generally located in the Philippines but frequents Australia on business.  With him and Joey Leviste, our other (ex officio) representative in the Philippines, the Council should now be able to work more closely than before with our contacts in the Philippines.
 
On behalf of the Council, I also thank our members who attended the AGM in person, by phone or by proxy.
 

Welcome Telstra

On behalf of the Council, I welcome Telstra as one of our new members. Telstra’s representative to the Council is currently Michael Bowman. Telstra would be well known to all our members and their friends and no doubt does not need an introduction. We look forward to working closely with Telstra and our other members.
 

Philippines’s new Consul General in Sydney

We welcome the Philippine’s new Consul General in Sydney, Mrs Anne Jalando-on Louis. A brief biographical note of her can be accessed on www.philippineconsulate.com.au.  
 

Seminars on ‘Doing Business in the Philippines’

Austrade, in conjunction with the Council and the Chamber of Commerce and Industry Australia, will be holding seminars next month in Melbourne (16 May), Sydney (17 May), and Brisbane (18 May). The seminars will be on ‘Doing Business in the Philippines’ and on a complimentary basis.  Click here to access the invitation.


Millie Telan, President

BPO Update

by Richard Mann, Vice President NSW

Why You Should Invest Your BPO In The Philippines?

The Business Process Outsourcing (BPO) industry here in the Philippines is like a Hollywood blockbuster film. Its called the sunshine industry because of the coming of BPO companies investing in the Philippines, which grew over the last couple of years and will look to further increase in the coming years makes it one of the fastest growing sectors of our economy. Majority of these investments came from call center giants, which makes up 70% of the whole BPO industry in the country. Now, the BPO industry in the country is estimated to be worth more than $200 billion and will only look to expand in the coming years with new and bigger companies staking their claim. The Philippines has become a hotbed not only for call center companies but also for a slew of other BPO companies all over the world.

In a recent study, the Philippines have overtaken India as the leading BPO provider in the world. Currently, there are around 1164 call center and Voice Over Internet Protocol (VOIP) companies spread over 24 key places around the country. This translates into a strong 600,000 workforce, a big percentage belongs to the call center industry. In 2010 alone, call centers in the Philippines posted revenue of more than $6 billion. Industry experts forecast a $15 billion revenue growth by 2015 and a 1.3 million workforce also around the same time.

BPO companies around the world give the Philippines an edge over other countries are of the following reasons:

Cheap operational and labor costs are one of the main reasons why BPO companies choose to operate their business in the Philippines as opposed to other countries such as India. BPO companies are given tax incentives, development assistance and many other benefits such as permanent resident status if they choose to invest in their respective companies here in the Philippines. The Philippines is also home to a wide range of skilled workers, ready to cater for the BPO industry. Being the third-largest English speaking population in the world, Filipinos have become proficient speakers. This is ideal for BPO companies as Filipinos could relay messages with the so-called American accent, which gives the callers a better experience and a clear path of communication. English speakers are steadily improving with world-class training and seminars to keep them at par with other BPO agents around the world. Labor wise, when compared to Indian BPO Practitioners, Filipino agents get half as much as their Indian counterparts, which would mean to a huge savings for the BPO companies.

Second, the Philippines is a westernized country, stemming from the years Philippines had been a colony of America. We learned to like any stateside and it wouldnt be problem handling callers coming from the states as Filipinos are not foreign to customs and beliefs, and would easily get along with them. The availability of western resources is key in maintaining a strong and long relationship with both callers and clients.

In totality, the Philippines is your one stop shop when it comes to the BPO industry. You won't regret it, I promise you.

Mining Update

by Gavan Collery, Vice President, Vic.

Philippine Mining at a Critical Cross Road

Mining in the Philippines – and the role that foreign entities play in mining – is at a critical cross road.

Fortunately, indications are that the Philippine Government realises this, and is now taking an active role in clarifying not only a range of uncertainties, but also taking action to ensure that key mining projects proceed in a responsible and nation-building manner.

The catalyst for this call to action is an arbitrary ban on open pit mining at a provincial level in South Cotabato in Mindanao; a ban that flies in the face of responsible mining practices, national law and the Constitution.

International observers are of the view that the national government should have dealt with the South Cotabato defiance of national law long ago, while locals have been of the view that the defiance was no more than local politics and that it would be resolved domestically.

The spark for national action is now well and truly a flame, given that the South Cotabato defiance has gone viral, and has spread to several provinces, thereby providing wide-spread defiance of national authority. Zamboanga del Norte and Batangas are reported to be latest provinces to consider passing laws that are contrary to national law. Romblon, Mindoro Oriental and Western Samar have put in place mining moratoriums.

The charge to attract and maintain Foreign Direct Investment in large-scale minerals exploration, development and production has been led by no less than President Aquino when he said recently: “I’m told that if there are resources and the large players would be out, the small scale operations would come in, which is more difficult to regulate.” The President has also directed national government to resolve the South Cotabato issue.

The President’s leadership has been underpinned by firm statements from DENR Secretary Ramon Paje who assured foreign investors while in Singapore recently that the Philippines would protect investments and push through with signed contracts in the mining industry.

In summarising mining industry concern about the spread of the provincial law-making virus, respected Filipino mining identity Gerry Brimo was quoted as saying: “There is not one country that is mineralised that has ever put a stop on its mining industry. We are coming dangerously close to being the first.”

Reinforcing this statement, Philippine Chamber of Mines President, Philip Romualdez, added: “It’s a question of the national government exercising its political will.”

Meanwhile, the latest and respected Fraser Institute Annual Survey of Mining Companies has just been released, and the Philippines ranks 66th out of 79 surveyed territories. This is a slight improvement on last year’s findings, but still ranks very poorly for nations with promising mineral prospectivity.

Key issues of concern in respect of the Philippines were uncertainty over disputed land claims, uncertainty over which areas will be protected, and uncertainty over administration and enforcement of existing regulations. The quality of infrastructure and trade restrictions were also cited.

In other news, Australian-listed miner Medusa Mining has been very active on the exploration front, with what one mining analyst described as “spectacular” drilling results from its Co-O gold mine in north-eastern Mindanao. Mindoro Resources has reported high-grade gold and copper intersections at its Pan de Azucar project in Iloilo.

In further encouraging news, the provincial board at Bayombong, Nueva Vizcaya, has endorsed a mining project of Australian firm FCF Minerals. Nearby, it has been announced that Australia’s Oceana Gold has joined President Aquino’s National Greening Program which is an initiative announced under Executive Order in February this year.

Political

Gov’t pushes for investments in natural gas pipelines

President Aquino urged investors to consider the country’s natural gas pipeline projects to be established within the next 3 years as his administration strives to create a more attractive business environment. “We have begun a number of projects, many of which may be of some interest to you. For one, we are planning the establishment of three natural gas pipeline projects within the next three years, primarily in Luzon, amusingly named BatMan 1 (Batangas to Manila), BatMan 2 (Bataan to Manila), and BatCave (Bataan to Cavite), with the energetic Gov. Vilma Santos-Recto, Batgirl is also present and we continue to support the exploration, development, and utilization of natural gases,” the President said. Energy Secretary Jose Rene Almendras indicated that the pipeline project could be offered under the public-private partnership program being pushed by the Aquino administration.
 

Majority of Filipinos back impeachment

Majority of Filipinos agree with the Supreme Court’s decision allowing the House of Representatives to impeach Ms. Gutierrez, the Social Weather Stations’ latest survey said. The poll showed 52% of respondents agreeing with the high court’s decision that allowed majority of congressmen to impeach Ms. Gutierrez. Only 15% of respondents disagreed with the decision, 29% were undecided, while 4% refused to answer, according to the survey conducted from March 4 to March 7. The SC on February 15 lifted a status quo ante order, clearing the way for the House to vote on the impeachment case. The survey showed that support for Ms. Gutierrez’ impeachment was higher in Metro Manila and class ABC, or the upper middle class.

Economy

A COMBINATION of sustained fast economic expansion and a young population makes the Philippines one of 11 countries with highest growth potential in the 21st century, global financial services firm Citigroup said.

Citigroup Global Markets, Citi’s brokerage and securities arm, in a Feb. 21 report, titled: "Global Growth Generators: Moving beyond Emerging Markets and BRIC," included the Philippines in its "3G" or "global growth generators" grouping.

These are countries that, based on its assessment, are expected to deliver high growth and profitable investment opportunities over the next 40 years.

"In our view, the countries that are most promising in terms of their growth potential are Bangladesh, China, Egypt, India, Indonesia, Iraq, Mongolia, Nigeria, Philippines, Sri Lanka and Vietnam," Citi said.

These countries performed well on its 3G index, which is the weighted average of six growth drivers, namely: domestic saving or investment, demographic prospects, health, education, quality of institutions and policies, and trade openness.

The Philippines got a score of 0.60, which was higher than Nigeria’s 0.25, Sri Lanka’s 0.33, Egypt’s 0.37, Bangladesh’s 0.39 and Iraq’s 0.58. But it was still less than Mongolia’s 0.63, Indonesia’s 0.70, India’s 0.71, China’s 0.81 and Vietnam’s 0.86.

The report did not provide the score the Philippines got per growth driver but noted that "investment in education and health should help it improve its score and its growth prospects, while institutional quality, which also pulled down its 3G index score, should be raised next."
Citi expects the Philippines to grow by an average of 5.5% from 2010 to 2050, the same growth rate projected for Sri Lanka.

This is faster than the projected 5% growth rate for Egypt and China, though slower than the 5.6% seen for Indonesia, 6.1% for Iraq, 6.3% for Bangladesh and Mongolia, 6.4% for Vietnam and India and 6.9% for Nigeria.

Citi said it expects the Philippines’ population to grow from 93.6 million last year to 146.2 million 2050, with the population of working-age people rising by 66.2% over that period.
Aside from the need to raise its investments in education and health, Citi said the country’s investment rate -- "unbelievably" low at 14.5% of gross domestic product (GDP) for 2006-2009 -- should be raised for the growth projection to materialize.

Governance and institutional reform should also be carried out if the country were to become one of the Asian tigers.

But working in its favor, "the Philippines has a widely dispersed diaspora sending home remittances and establishing personal, professional and commercial contracts, links and networks that will benefit the country in the future," Citi noted.

The Philippines posted a 34-year-high growth rate of 7.3% last year, topping the government’s 5%-6% target. For this year, the government has set a higher growth goal of 7%-8%.
University of the Philippines economist Benjamin E. Diokno said via text that a 5.5% average GDP growth for the next 40 years will not be much of an improvement "if the quality of growth is the same as the one we’ve experienced in the last 10 years and if population grows at 2.25%."

Citi said its 3G methodology presents a new way of viewing countries, regions, cities, sectors or industries, pointing out that the usual approaches have failed to identify sources of global growth and investment opportunities.

Citi said it sees strong global growth until 2050, with an annual average of 4.6% until 2030 and 3.8% until 2050. Developing Asia and Africa will be the fastest growing regions until 2050, driven by population and income growth. "We forecast Developing Asia will grow by 7% between 2010 and 2030 and by 5.6% between 2010 and 2050, accounting for 55% and 54% of total world GDP growth over these two periods," it said.

The Philippines also forms part of Goldman Sachs’ Next Eleven countries, along with Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, South Korea, Turkey and Vietnam.

Business

Mining investments to hit $1Bn

The Chamber of Mines of the Philippines expects mining investments this year to reach $1billion, chamber president Benjamin Philip Romualdez said. Last year, mining investments in the country reached $955.85 million and could have easily gone over the $1-billion mark had some projects not been delayed. In a briefing to members of the Economic Journalists Association of the Philippines, Romualdez said mining investments could be higher if controversial issues and concerns are resolved by the government. The economic issues include government plans to increase to 5% the royalty on mineral reservations and unregulated imposition of mining taxes by local government units (LGUs). According to Romualdez, the government has to be careful in changing the rules of the game midstream as it is turning off investors.

Japanese firms eye PH as temporary base

Japanese electronics and semiconductor firms with operations here are looking at relocating some of their production in the Philippines following the earthquake and tsunami that devastated their home country, Elmer San Pascual, group manager for public relations of the Philippine Economic Zone Authority (PEZA) said. "Some of them have started moving their operations little by little. In the semiconductor sector, supply cannot be disrupted because these components are used in electronic products," he said. Output of these plants will be re-exported directly to their U.S., Asian and Latin American markets. At least 3 companies have indicated to PEZA director-general Lilia de Lima their intention to move some of their operations here temporarily while reconstruction and recovery work is being done in their factories at home. There are 618 Japanese companies registered with PEZA, or about 27% of the 2,272 companies located in ecozones.

PH to start importing natural gas in 2-3 years

As part of plans to rely more on clean fuels in the long term, the Department of Energy (DoE) will include natural gas in the importation mix of the country to augment supply from the Malampaya natural gas field. Energy Undersecretary Jose M. Layug, Jr. said that the country can start importing natural gas in 2-3 years. "The master plan includes importing natural gas to augment the supply from Malampaya because it cannot [sufficiently] supply [the Philippines] in the long term," Layug said. He said the department is looking at importing natural gas from Malaysia, Australia and Qatar. The Natural Gas master plan involves the building of pipelines, storage facilities and other infrastructure for liquefied and compressed natural gas (CNG).

Open pit mining ban set to take effect in S. Cotabato

South Cotabato’s ban on open pit mining will now be implemented after the province’s governor signed the implementing rules and regulations (IRR) of a disputed environment code. "The real headache is only about to start but we will look into options to allay possible economic impacts," Gov. Arthur Y. Pingoy said. The rules, which take effect 15 days after their publication, further set a stumbling block to the Tampakan Copper-Gold Project of Australian-backed Sagittarius Mines, Inc., (SMI), whose mining investment has been estimated at $5.9 billion. Environment Secretary Ramon J. P. Paje, however, said the concern was premature since commercial operations at the Tampakan mine would not begin until 2016. "The IRR aims instead to stop current small-scale mining and sand and gravel quarries all over the province happening at this moment," Sec. Paje claimed.

Company News

FPSC forms JV with Korean solar company

First Philec Solar Corp. (FPSC) has formed a new subsidiary to handle its first joint venture with a Korean solar company. The new wholly-owned unit, First PV Ventures, has signed a joint venture with Nexolon of Korea for the construction of a 400-megawatt solar wafer-slicing facility in Batangas.

Forum Energy complete survey in Reed Bank

Despite territorial disputes, UK-based Forum Energy Plc said it had completed its seismic survey at Service Contract (SC) 72 in the Reed Bank basin. Forum executive chairman Robin Nicholson said as part of the work program, 564.887 square kilometers of 3D seismic data was acquired over the Sampaguita gas field and 2,202.38 line-kilometers of 2D seismic data was also acquired over the block in order to further define additional leads identified within the SC 72 acreage.

Nido Petroleum to drill Gindara prospect

Nido Petroleum Philippines Ltd., is set to drill its Gindara prospect off Palawan in May this year after firming up the services of a Malaysian oil rig company. In a report, Nido head of exploration Jon Pattillo said the deepwater rig Atwood Falcon was contracted to drill Gindara-1, with an upside potential of 1 billion barrels unrisked oil in place.

Infrastructure

Pandacan, LRT-1 as critical areas

Private property developers assured the public that their buildings adhered to standards set by the building code although the Light Rail Transit (LRT) Line 1 and the Pandacan Oil Depot are 2 areas of concern. LRT-1 needs immediate rehabilitation which can take up to 3 years, while there is a great risk involved with the Pandacan Oil Depot in Manila in case an earthquake of 7.2 magnitude hits. Under the new National Building Code, a structure should be able to withstand an intensity 8 to 8.9 earthquake. DPWH Undersecretary Raul C. Asis said that the LRT-2 and LRT-3 (Metro Railway Transit) lines have been assessed by the department and were found to be able to stand earthquakes of with a 7.2 magnitude. Meanwhile, the Bureau of Fire Protection (BFP) admitted that in case a fire erupts after a strong earthquake in the Pandacan Oil Depot, the agency would not be able to address the situation appropriately due to lack of resources.