President's Report

Executives Dinner on 14 June 2011

The Council hosted a successful dinner on 14 June 2011 with the Philippine Secretary of the Department of Trade and Industry, Hon. Gregory Domingo, as the keynote speaker.  In attendance were over 100 APBC members and friends of the APBC.  We thank Xstrata Copper (Philippines) for being the Council’s corporate partner in that event. Also present were Adrian Cristobal, Jr, the Philippine Undersecretary of the Department of Trade and Industry; His Excellency Rod Smith, Australian Ambassador to the Philippines; Hon. Anne Jalandon-Louise, Philippine Consul General in NSW; Ross Bray, Australian Senior Commissioner for Trade and Investment in the Philippines; Michelle Fatima S. Sanchez, the Philippine Special Trade Representative/Consul (Commercial) in Sydney; and many other distinguished guests.

We thank all those who attended this event.

The Secretary gave an impressive view of the state of the Philippine economy including business and investment opportunities in the Philippines.  The Secretary mentioned ‘tourism’ as the Philippines’ number one priority at this stage, which requires substantial investment in infrastructure.  The Philippine government has a number of infrastructure projects, most of which will be accessible to foreign investors or businesses wanting to partner with the Philippine government in these projects.  It is expected that the Philippine Government will hold a PPP roadshow in Sydney sometime late this year.

Please click here for excerpts from, or highlights of, the Secretary’s presentation.  

Philippine Australia Ministerial Meeting (PAMM)

The Council participated in a business dialogue between the Philippines and Australia, which was held on 15 June 2011 in Canberra.  Representing the Philippines was Secretary of Trade and Industry, Gregory Domingo, and Australia was represented by Australian Minister Craig Emerson.  A government to government dialogue between the two countries was held on 16 June 2011 also in Canberra.  We consider that both Secretary Domingo and Minister Emerson gave the business delegates a fair hearing.  The Council will endeavour to report to members on the outcome of the business dialogue as they become clear.

New Members

On behalf of the Council, I welcome the following new members:  

The Australian Gift and Homewares Association whose representative to the Council is David Leek, and Paul Leung from Serco Asia Pacific.

1st Philippine Australia New Zealand Business Forum

If you have not registered for this forum, click here for the flyer and to register.  When registering, please indicate APBC as the source of your invite. 


Millie Telan, President

BPO Update

by Richard Mann, Vice President NSW

Importance of Social Networking in Business

There is no doubt that one of the most commonly talked about subject by millions of people around the world today is their social networking sites such as Facebook and Twitter. Based on statistics 2010, in total 30 billion pieces of content are shared on Facebook each month and 25 billion tweets were sent on Twitter. These social networking sites have changed the way people interact with their families and friends; as well as businesses to customers.
 
Creating a social networking existence is paramount in this age of new technology as people want as much information as they can get and they want it now. Social media can be used to increase exposure, familiarity, brand awareness, increase the quality of customer service and strengthen customer relationships. Customer service agents can also interact with users online and talk to them about different aspects of the products and services. Immediate feedback can be given on Facebook, Twitter and YouTube via comment boxes on the various pages offering the chance to communicate with your customers like never before could be the competitive advantage you are after. Even the BPO industry is embracing social networking, allowing its young workforce to step ahead and be a part of the worldwide social platform. In outbound call center, it is a great marketing tool for lead generation. Small business owners are able to build relationships, gain return customers, and receive referrals by marketing the skills as well as services they offer via social networking.
 
While there are the certain issues to deal with as a result of social network visibility such as open criticism and competitive transparency, it is a fact that social media already has a significant share in advertising, and should be treated as an integral part of marketing mix in every company.

Mining Update

by Gavan Collery, Vice President, Vic.

Mining Takes a Front Row Seat at the Pamm

The months of May and June were very busy for those companies and individuals who look to a strong bilateral relationship in minerals development for Australia and the Philippines.

The APBC played a major role in representing the minerals industry at the recent Philippines-Australia Ministerial Meeting (PAMM) in Canberra, hosted by the Australian Trade Minister and the Philippine Trade Secretary.

In an un-precedented and tell-tale sign of how serious foreign investors see recent events and the future relationship, five of the key business bodies in the bilateral relationship agreed on a united Position Paper to address minerals industry concerns.

The five bodies are the APBC, its counterpart in the Philippines the PABC, the Australia-New Zealand Chamber of Commerce (ANZCHAM), the Philippine Chamber of Commerce and Industry (PCCI) and the Chamber of Mines of the Philippines (COMP).

Their united Position Paper addressed five key issues. They are:

• Consideration in the Philippines of a new tax or royalty hike under the guise of declaring current mining operations or those in advanced development or planning as ‘mineral reservations’ – industry maintains that the Philippine mining industry is going through a rebirth, and a new tax burden will seriously damage the industry’s re-emergence. The minerals industry has much to offer the Philippines in economic benefit and employment, but it will not deliver if asked to carry an additional tax or royalty burden.
• Greater certainty in applying existing national law – a much-publicized ban on open pit mining in some Philippine provinces is acknowledged by the Philippine Government as contrary to national law. Such local ordinances, in defiance of national law, are extending to a general ban on mining in other localities and they have caused a slowdown in expenditure flows on major projects. This is damaging international investment confidence.
• Accountable mining activity – there is a need to resolve issues surrounding small-scale mining. Regulation, control and supervision of small-scale mining in the Philippines should come under the relevant national government authority until LGUs have attained the technical competence to deal with mining operations as well as the related fiscal, health and environmental issues.
• Transparency in permitting – templates and practices need to be established for disclosing tax payments and receipts from the mining industry at a corporate and LGU level. Such action will help to tackle issues of graft and corruption, and improve transparency in permit issuances and tax payments.
• Interface with Indigenous Peoples – there is a need to explore social and legal platforms for responsible minerals development in the context of Indigenous Peoples.

In company news, Australian-based OceanaGold has restarted construction activity at its Didipio mine site in Nueva Vizcaya. The cost of construction is estimated at $185 million. OceanaGold expects the gold and copper producing plant to be completed by the end of 2012 or early 2013.

Sagittarius Mines, owned 62.5% by Xstrata Queensland and 37.5% by Melbourne-based Indophil Resources, has delivered for comment the draft Mine Environmental Impact Study focusing on its world-class Tampakan Copper-Gold Project in southern Mindanao. The review process is expected to take a few months and the final version of the EIS delivered to government before the end of this year. Delivery of the EIS is considered a critical step in the approvals process.

Philippine-based MRC Allied says it is in firm talks with an un-named Australian company about partnering with it in the proposal to develop a copper and gold prospect in Surigao del Sur.

Dual-listed CGA Mining, which has Australian interests, has put in place a US$43.5 million project financing facility for its Masbate Gold Project which is already in production.

Australian miner Medusa Mining has implemented a range of efficiency measures that will save about $10 million in the expansion program at its Co-O gold mine in Agusan del Sur.

Political

US backs Manila’s claims; Beijing slams Washington

The United States will fully support the Philippines’ territorial claims in the West Philippine Sea, Washington’s ambassador to Manila Harry Thomas said.

President Aquino later expressed confidence that Washington’s presence as a Mutual Defense Treaty partner of the Philippines would help ensure all claimants to the Spratly Islands, including China, would “conform to international laws.”

Mr. Aquino said Washington’s support for Manila would serve as a counterbalance to Beijing’s recent incursions into the areas being claimed by the Philippines. But he repeated his call for a peaceful resolution to the territorial disputes as he acknowledged China’s position as the region’s only superpower.

The Mutual Defense Treaty says the United States and the Philippines will support each other if either is attacked.

Economy

Remittances up by 6.3% in April

Money sent home by Filipinos working abroad grew by 6.3% to $1.62 billion in April, according to BSP. The result brought the year to date tally to $6.21 billion, up 6% from a year earlier, and the central bank attributed the expansion to steady demand for Filipino workers and a better formal remittance network. The January-April growth, however, was lower than the 6.6% recorded in the same period last year, a development University of Asia and the Pacific (UA&P) economist Cid L. Terosa said this could be traced to Arab uprisings, the disaster in Japan and a stuttering global recovery. The BSP, for its part, said remittance inflows "continued to draw support from the steady overseas demand of Filipino skills and expertise". It said approved job orders had reached 269,386, of which nearly a third has been processed, as of May.

NG debt rises to P4.7-Tn as of March

Outstanding national government (NG) debt rose to P4.706 trillion as of end-March, up 5.6% from the P4.458 trillion owed a year ago, latest data from the Bureau of Treasury showed. On a monthly basis, NG debt increased by P50.3 billion, or 1.1%, from the P4.655 trillion recorded as of end-February. Bulk of the debt was owed to domestic creditors, totaling P2.667 trillion.

This was a 5.1% increase of P130 billion from the P2.537 trillion as of end-March 2010, driven
by the issuance of government securities. Domestic debt inched up 0.1%, or P2.4 billion, on a monthly basis. In comparison, foreign debt hit P2.039 trillion by end-March, increasing 6.1% or P117.5 billion from the P1.921 trillion owed a year ago. On a monthly basis, foreign liabilities increased by 2.4% or P47.9 billion from P1.991 billion. A statement of the Treasury bureau explained that a P63-billion net availment and a "P1-billion adjustment due to the late receipt of notices of availment" were offset by an P11-billion appreciation of the peso against the dollar and a P5-billion depreciation of the third currencies against the US currency.

Gov’t spending down 8.7% to P402.8Bn

State spending by all departments and agencies amounted to P402.8 billion as of end-May, the Department of Budget and Management (DBM) reported. The amount is equivalent to 32.6% of the P1.237-trillion disbursement program for 2011 via the department’s notices of cash allocation (NCAs). Budget and Management Secretary Florencio Abad said this amount is only 8.7% less than the P441.3-billion negotiated checks during the same period last year, which
was the height of election spending in the run up to the May 10 election.

Agencies’ disbursement capacity also slightly improved as the amount of checks negotiated during the period amounted to 92% of the total P437.9-billion NCAs issued. On the other hand, the NCA’s utilization rate as of April 2011 was only 90%.

Moody's raises PH credit rating

The Philippines received its third rating upgrade well within the first year of the Aquino administration after Moody’s Investors Service raised the country’s credit rating, with a stable outlook amid the gains made in fiscal consolidation, sustained macroeconomic stability and robust external payment position. The Aquino administration welcomed the upgrade saying that the improvement in the country’s debt rating had a lot to do with progress made in fiscal
consolidation. Moody’s raised the Philippines’ foreign and local currency long-term bond ratings to Ba2 from Ba3 with a stable outlook. Ba2 is classified as non-investment grade speculative debt and still 2 notches below investment grade. The government said the upgrade, which it described as long overdue, affirms its economic agenda, particularly efforts to trim the budget deficit.

Banks told to raise reserves

Monetary authorities ended a run of policy rate adjustments this week but raised the bank reserve requirement in the continuing effort to control inflation. The 1-percentage-point increase in the reserve requirement to 20%, to take effect on June 24, is a "preemptive move to counter any additional inflationary pressures from excess liquidity," central bank Governor Amando M. Tetangco, Jr. said. Deputy Governor Diwa C. Guinigundo added, The hike in reserve requirement is seen to siphon P38 billion in deposits and 0.9% in domestic liquidity. Majority of analysts earlier polled by BusinessWorld expected another 25-basis-point (bps) rate hike. The rest, however, said the BSP would hold off from a third consecutive adjustment given a first quarter growth slowdown and May inflation hitting the lower end of the central bank’s forecast for the month. Earlier this month, the BSP reported that domestic liquidity had grown by 7.3% in April to P4.2 trillion. The expansion, however, was down from March’s 10.3%.

Business

40 Australian firms keen on investing in oil/gas exploration

At least 40 prominent Australian oil and gas exploration companies have expressed interest in investing in the Philippine upstream oil and gas industry, a favorable start for the government’s international road show for the Philippine Energy Contracting Round (PECR 4). These interested companies include Shell, Apache, Chevron, AWT International, Black Swan, CalEnergy, Cue Energy Resources, ENI Australia, Exxon, Neon Energy, Otto Energy, Woodside, Anglican Resources PLC and Tap Oil, Energy Undersecretary Jose M. Layug Jr. said. The Australian roadshow held last May 23 was a kick-off event to promote the official launch of the PECR 4 this coming June 30. The DoE has also scheduled roadshows in Singapore, Houston and London. This early, many investors have already registered for the Singapore and London presentations and have been awaiting information pertaining to the blocks to be offered.
 

Tourism targets 6.3-Mn arrivals by 2016

At least 6.3 million international arrivals and over 32 million domestic travelers are expected by 2016. This is the first cut of the stakeholder developed goal of the National Tourism Development Plan (NTDP) as previewed by Secretary Alberto Aldaba Lim. The plan, still in the draft phase will be completed by June and will be presented to President Aquino in July, “The President considers tourism as a frontliner and revenue driver in reducing poverty so we want to make sure that the development of tourism is more sustainable and inclusive.” To achieve that, focus will be on 3 key strategies: 1) improving market access and connectivity, 2) developing market competitive tourist destinations and products, and 3) improving tourism institutional, governance, and human resource capacities.

Jobless rate declines in April

Unemployment fell slightly in April but labor experts said this was not necessarily good news as an increase in underemployment indicated a deterioration in the quality of available jobs. The jobless rate dipped to 7.2%, an improvement from January’s 7.4% and the 8.0% recorded a year earlier, data from the National Statistics Office (NSO) showed. In absolute terms, the number of jobless Filipinos went down to 2.9 million from 3.1 million a year ago. But the ranks of the underemployed -- those seeking more work or an additional job -- grew by 800,000 to 7.1 million Filipinos, a fifth of the 39.7 million-strong labor force in April.

Company News

Australian call center firm to open second site in Libis

CANBERRA -- An Australian call center firm plans to put up a second site in Quezon City this year, a development which the Trade department said was an indication of “growing interest” of Australian companies in the Philippines’ information technology (IT) and business process outsourcing (BPO) sectors.

Trade Secretary Gregory L. Domingo made the announcement at the sidelines of the Philippines-Australia Ministerial Meeting last week, following a courtesy call by officials of Stellar Global, Inc., which operates a 1,500-seat contact center in Cubao.

Stellar Global will open a new site at Eastwood City in Libis, with at least 1,200 seats, the Cabinet official said.

The Trade department said the announcement had been cleared by Stellar Global. On its Web site, the firm said it would put up a new site after three years of operations “as demand for voice based and back of house processing services continue to grow worldwide.”

Philippine operations support clients in Australia, the United Kingdom, the United States, and Canada. Stellar Global has operations in all four countries.

Stellar Global’s Chief Global Strategy Officer Michael Lumsden met Mr. Domingo in Sydney and “affirmed Stellar’s commitment to continue its expansion in the [Philippines],” the Trade department said in a statement.

In the statement, the Trade department also said Telstra, Australia’s largest telecommunications company, also “confirmed it will continue to grow its outsourcing business in the Philippines.”

“Telstra Group Managing Director Robert Nason also expressed interest in helping support the development of the industry through training and education initiatives,” in a dialogue with Mr. Domingo.

In a dinner meeting with the Australia-Philippines Business Council last Tuesday in Sydney, Mr. Domingo invited Australian investors to look into the local BPO sector.

BPO operations have grown to 600,000 seats this year from just 5,000 a decade ago, and there will be an additional 80,000 to 100,000 seats this year, he said.

“The Philippine IT/BPO industry has certainly caught Australian interest.

Based on estimates by the Business Processing Association of the Philippines, the share of the Australian market in the total revenue generated by the industry has grown to 6% in 2010 from 1.5% in 2008. The US remains the top market with 70% share, followed by the UK and Japan,” the Trade department said.

It cited the “Australian Contact Centre Outsourcing Market Report 2011,” published by callcentres.net, a Sydney-based research outfit.

“[T]he Philippines has moved ahead of the more traditional offshore-outsourced destination of India, with at least 18% of functionality across Customer Interaction, Back Office Processing, IT and Finance being based in the Philippines.

“This movement from India in favor of the Philippines is perhaps unsurprising given the increased customer service focus of the Filipino industry over the past few years,” the statement quoted the industry report as saying.

Infrastructure