President's Report

New Australian Ambassador to the Philippines

The Council welcomes the appointment of Mr Bill Tweddell as the new Australian Ambassador to the Philippines.  Mr Tweddell will replace Ambassador Rod Smith who  has been a very good friend of the Council.  

Mr Tweddell will take up his appointment in January 2012.  See the website of James Cook University for some information about Mr Tweddell.

We look forward to meeting and working with Mr Tweddell.
 

Thank you to Ambassador Rod Smith

On behalf of the Council, I thank Ambassador Rod Smith for supporting APBC in its role of promoting trade and investment between Australia and the Philippines, during his nearly 4 years in office.  The Council wishes him all the best in his next appointment.

Meeting with the Philippine Ambassador to Australia

On 4 November 2011, the new Philippine Ambassador to Australia, Mrs Belen Anota, met with some officers of the Council.  At the meeting we discussed ways in which the Council and the Ambassador will work together on major Philippine projects which may be of interest to the Australian business community. The Council is delighted that we will be able to continue to communicate with the Ambassador in an open and frank manner.  The meeting was certainly very productive.  We encourage our members to let us know if they need the Ambassador's assistance in their dealings with the Philippines.

Thank you to Ross Bray

Ross' term as Australia's Senior Trade Representative in the Philippines finishes on 18 December 2011.  We thank Ross for his generous support of the Council throughout his term in office. We wish him all the best in his new role.
 

Welcome to Anthony Weymouth

Anthony replaces Ross as Australia's Senior Trade Representative in the Philippines.  We look forward to a mutually beneficial working relationship with Anthony and his team.
 
On behalf of the Council, I welcome Anthony to his new role.

Screening of the Jose Rizal movie

We thank all the APBC members and friends who came to the successful screening of the Jose Rizal movie in Sydney.  The movie certainly refreshed my knowledge of Philippine history, and in particular, the period of the Spanish occupation of the Philippines.  I received very good feedback from some of those who were with us that evening.  

On behalf of the APBC, I also thank Eduard Alcordo for organising the event and those who volunteered to help make the evening a success.  A special 'thank you' to Janette Rose who provided us with plenty of beautiful food.

2 December 2011 function deferred to February next year

For various reasons, the event planned to take place on 2 December 2011 is deferred to 23 February next year.  This would be an ideal networking opportunity for members of the Council.  

Change of contact details - a reminder

If you expect your contact details to change in the immediate future, please let us know as soon as you are able to.


Millie Telan, President

BPO Update

by Richard Mann, Vice President NSW

Philippine IT/BPO Industry

The Philippine IT/BPO industry is composed of shared service facilities and independent companies: large global corporations render back-office operations at competent centers in the Philippines, third party service providers offer support to companies worldwide from the Philippines and independent Philippine companies provide services to local and international clients. With these, companies of all sizes and branches can access the right outsourcing and offshoring mix.

The Philippines presents a wide range of outsourcing and offshoring capabilities. The two main areas of expertise are -- Contact Centers and BPO. In these areas, the Philippines rank among the highest worldwide according to surveys.

Software development, medical & legal transcription, animation and engineering design have also grown steadily over the past few years.

Contact Center

The most outstanding sector in the past years has been in contact center servicing.  Many companies worldwide see the Philippines, as the 3rd largest English-speaking nation, an ideal location to offer inbound and outbound services -- taking advantage of the friendly, unobtrusive and polite attitude of Filipinos.

Customer service, help desk, marketing and sales, delivery of customer loyalty programs, new product promotions, and research are a few examples of services provided by Philippine contact centers.

Business Process Outsourcing (BPO)

BPO covers a wide range of services -- from finance & accounting to business intelligence. 4,000 new certified accountants per year assure work as not only technically correct but also understood precisely and efficiently.

Other BPO areas are database-, network-, transaction- and supply chain management, HR administration, as well as sourcing and procurement.

Software Development

Already operating for more than two decades the software development sector of the Philippines employs over 80,000 skilled programmers, system analysts and project managers. 30,000 new technology graduates provide a constant expansion of the workforce every year.

In addition to shared services, companies with thousands of programmers, independent software vendors of different sizes provide services in specialized niches or develop, sell, and package commercial applications.  Among the services are management, analysis and design, programming, testing, installation, maintenance, training, customization, reengineering and conversion.

Animation

Known for the creativity of its people, the Philippines is a preferred destination of the animation industry worldwide, with major projects completed for Hanna Barbera, Disney, Warner Bros., and many other internationally recognized producers of animated features.
Filipinos are also beginning to develop original content animation for global markets. A wealth of experience in the production of animation and rich cultural background have fostered this sector's capacity for generating innovative concepts, cutting-edge design, and world-class quality. This has led to a surge in interest among Philippine animation companies in co-producing international content with established global partners.  2D, 3D and 4D animation, pre-production service, web animation, gaming and flash animated series are some of the services the animation sector offers its clients.

Medical and Legal Transcription

The great demand for documentation of medical and legal information continues to rise constantly. In some countries, hospitals must convert medical records into electronic format, which is done by a specially trained workforce within a 24-hour period. The rising global demand for competent yet cost-effective workers poses an advantage for the Philippines.  Some services offered by local companies are: consultation reports, office visits, clinical-, psychiatric- emergency- and progress notes, patient assessment, therapeutic procedures, and diagnosis.

Engineering Design

The engineering design sector offers a wide range of services in civil engineering, architecture, and design. More and more companies have been utilizing Philippine facilities for core research and product development, for planning and procurement, as well as for important construction projects. The roster continues to grow as the country effectively keeps up with the global engineering design sector's skills and technological requirements.

Mining Update

by Gavan Collery, Vice President, Vic.

Foreign Embassies Make a Stand for Responsible Mining

Foreign investors and potential foreign investors in the Philippines mining industry continue to express serious concern as more provinces adopt rogue policies to hinder minerals development that could help the Philippines in its quest for poverty alleviation.

The latest blow to progress has come from Zamboanga del Norte, a province in western Mindanao, which has implemented not only a ban on open pit mining but also an irrational timeframe for how long open pit mines can be kept in operation. Local mine operator, TVI Resources, has sought a court order to stay the local ordinance and overturn it.

A similar and lingering provincial ordinance has been adopted in South Cotabato, southern Mindanao, and it is hitting hard at development plans for the Tampakan copper and gold project there which, if it goes into development, will be the largest single foreign investment in Philippine history. At the urging of anti-mining and anti-foreign investment NGOs, other provinces have moved to ban open pit mining in a series of actions than can best be described as ‘viral.’

While local governments play merry hell with national law and the Philippine Constitution, foreign and even Philippine mining houses now look to the national government to show clear and strong leadership.

It seems the national government of the Philippines might have heeded the call in the guise of a specialist ministerial level panel established by no less than President Aquino. The panel including four of the President’s direct Secretarial reports, will review Philippine mining policy, and industry is looking for the panel to report in favor of responsible minerals development so that the mining industry can take its proper place in providing employment and significant long-term growth to the Philippines economy. In development alone, for example, the $6 billion Tampakan project would add one full percentage point to Philippine GDP.

The move to ban open pit mining in Zamboanga del Norte is the straw that broke the camel’s back – industry has united in its call for the national government to intervene without delay. At stake here is the reality that the Philippines is a poor place to consider investing your money; a place of sovereign risk.

Malacanang well knows this, and we are seeing signs of action – at last!

So serious has this matter become that very recently there was a mine safety conference in northern Luzon – usually a low key affair, despite the fact that mining sees work safety as paramount.

This event was openly and deliberately attended by a range of foreign Ambassadors as they sought, not too subtly, to capture national government attention to the matter and involvement in rectifying what could be a missed and costly opportunity for economic reform in the Philippines.

No less than five foreign ambassadors attended the conference and made their thoughts known. These countries included Australia, Chile, Great Britain, South Africa and Brazil. The Philippine Government could not have missed their united message or appeal for common sense to prevail, underpinned by immediate action.

The respected Chamber of Mines of the Philippines has taken up the cause of investment in their mining industry, and has urged the Philippine national government to take immediate action to resolve – once and for all – conflicting national and local laws.  For long-term investment – and that is what mining is – you need certainty.

In support of the provincial governments, the chamber has also called for mining companies to be allowed to directly pay some forms of tax to the LGUs in which they operate.

In company news, Australian-listed Mindoro Resources reports further high-grade intercepts from its Lobo gold project, Batangas. Mindoro also continues to report promising news from its Agata nickel project in Surigao.

Medusa Mining has cut gold production targets for its activities in Surigao del Sur, down from 100,000 ounces to 90,000 ounces for 2012. They cite ‘mine development taking precedence to prepare the mine for higher production output in 2013.’

Finally, Australian-based Mining Group is reported to have acquired an 80% interest in the Comval copper and gold project in the Compostela Valley.

Economy

ADB cites critical dev't bottlenecks

The Asian Development Bank (ADB) has cited the lack of fiscal space, weak revenue generation and constraints in public expenditure as critical development bottlenecks. Claudia Buentjen, principal country specialist in ADB’s Southeast Asia Department said the lack of fiscal space has often resulted in “persistent fiscal imbalances.” Furthermore, she also said this lack of fiscal space has resulted in low public infrastructure investment and competitiveness, which in turn, have resulted in low private investments. She said that there are generally 2 ways to improve fiscal space and that is to raise new taxes and improve tax administration.

No need for government to raise $500Mn overseas

The government will no longer push through with raising the remaining $500 million of its 2011 commercial borrowing program. “We see no need to issue the amount given our good cash position and we can easily tap the domestic capital market to source funds,” National Treasurer Roberto Tan said after a Treasury bill auction. The government programmed $3.25 billion in commercial borrowings this year. It raised $1.25 billion from 25-year global peso bonds in January and another $1.5 billion came from 15-year dollar-denominated bonds offered in March. Mr. Tan said foreign markets may not be focused on subscribing to a relatively small amount with the year nearly over. Asked if the $500 million would be carried over to the commercial borrowing plan for next year, Mr. Tan said, “not necessarily, but it remains to be an option.” Mr. Tan also said the borrowing plan for the last 3 months of 2011 would not be changed. The government plans to raise P99 billion from the local debt market this quarter.

Business

PH banks in Asia's 500 list

Sixteen Philippine banks have made it to the list of 500 strongest banks in the region, based on a study by The Asian Banker. Of the 16 Philippine banks, 13 are commercial banks and 3 are thrift banks. The Metropolitan Bank & Trust Co. (Metrobank) has been adjudged the strongest bank in the Philippines, and the Philippine Savings Bank (PSbank) the strongest among the 3 thrift banks. Banco de Oro Unibank Inc. (BDO) has been classified as the largest Philippine bank – at 186th among the top 500 banks in the region. East West Banking Corp. (EastWest Bank) has been recognized as the largest gainer, with its reported 191% increase in net profit. The study recognizes Security Banking Corp. (Security Bank) as having the highest
return on assets among regional banks. It has the highest return-on-equity among Philippine banks. As the biggest Philippine bank, BDO has been ranked 186th from 195th in 2010. Metrobank kept its ranking at 197th. The Bank of the Philippine Islands (BPI) has improved to 200th spot from 211th while Land Bank of the Philippines is at 264th down from 251st in 2010.

Rosy metal outlook to back mine expansions

Mining firms are advised to undertake expansion of existing operations to take advantage of forecasts of strong metal prices and attractive borrowing costs, analysts said. Miners however, should be more cautious in starting new projects as metal prices are harder to predict in the longer term. “It is easier to expand existing mining operations now especially if you have cash flow from the current operation of the mine,” Richard Mills, chairman of Chalre Associates Executive Search and columnist at The Asia Miner magazine, said. Metal prices, which at present are higher relative to its prices 5 years ago, are seen to stay at around the same levels until next year, Mr. Mills said. “With economic uncertainty in Europe now seen to be being resolved, I think gold prices will be around $1,500 to $1,700 by the end of the year, barring news of economic crises,” Mr. Mills said Spot gold finished at $1,743.10 per ounce on Friday according to a wire report.

Company News

BPO firm Stellar plans to open one site per year

Monday, 14 November 2011 21:15 max v. De Leon / reporter

THE Australian business-process outsourcing (BPO) firm Stellar is seeking to put up a facility with a capacity of 1,000 seats in the country every year as it seeks to take advantage of the low operating cost and top notch talent here.

“When we came in, we were first attracted by the lower cost. But soon, we realized that the performance of the people here are better. Their ability to adapt to process and cultures is second to none. The Philippines will be our fastest-growing location globally,” Stellar Global CEO John Hollingsworth said at the inauguration of its 800-seat facility in Eastwood City, Libis, Quezon City, on Monday.

Its first facility in the Philippines is in Cubao, Quezon City, which has around 1,100 personnel.
Pablito Lim, chief finance officer of Stellar Philippines, said the company is committed to invest at least P300 million for each of the sites it will open. Stellar, he said, already has identified another location in Quezon City for its third site.

Stellar currently has 1,500 personnel in the country servicing the voice and nonvoice BPO requirements of its clients in various industries, including telecommunications, utilities and airlines. It has a total work force of 5,000 in more than a dozen locations in the Philippines, Australia, Scotland, Canada and the US.

“Our intention is to be strong in Metro Manila in the next two years and then we will go out to the provinces. We will have at least 1,000 seats per site,” Lim said.

With the strong growth of the industry that makes good locations scarce, Edmund Macaso, CEO of Stellar Philippines, said the company would probably put up its own building once its own expansion demands it.

“We are currently working with companies that can advise us on the locations that have the necessary infrastructure and available talent,” Macaso said.

Right now, he said the company has a hiring rate of only 5 percent to 8 percent. The company is hiring at a seat-per-employee ratio of 1:1.2.

Stellar’s Philippine operations is the most profitable because of the lower operating cost and high productivity of their work force.

The newly inaugurated Stellar facility in Eastwood currently has about 400 agents. “We project to fill this up next year and then build our new site by the middle or third quarter of next year,” Macaso said.

Lim said the strategy is to build a new site ahead of demand so it could have a buffer for at least one new account.

(In Photo: Edmund Macaso (left), Stellar Philippines CEO, and Pablito Lim, CFO of Stellar Philippines, answer questions from the media during a press conference on Monday in Quezon City)

Infrastructure