President's Report

November and December events

The invitation to the screening of the film "Jose Rizal" on 4 November 2011 closes on 31 October 2011.  Please click here to view the invitation. The acceptances to date are very encouraging. This is a perfect opportunity for you to enhance your knowledge of the very rich Philippine history, in the company of those with similar interests. For those who ask who Jose Rizal is, he is the Philippines' national hero.

At this event, the APBC will also officially welcome the Philippines' Consul General in Sydney, Mrs Anne Jalando-on Louis.

The Council will also welcome the Philippines' new Ambassador to Australia, Her Excellency Ms Belen Anota, at a net working event on  2 December  2011, in Sydney. Please pencil in this date.  An invitation will follow shortly.

APEC Business Travel Card

Please click here for an update from the Hon Chris Bowen MP on the eligibility criteria for the APEC business travel card.  The card is extremely important to those who frequently travel within the APEC region.  Most of the APBC members would be impacted by these new eligibility criteria.  You may wish to share your experiences in obtaining this card with members of the APBC, particularly the tips and traps involved in the process.  You can email your experiences to me so we can publish them in our newsletter.

Members profile

Members are encouraged to give their profile to the Council for posting on the members area of our website.  The profile should be about 200 words in length.

What the APBC should do for you

Please email any member of the executive committee of the APBC for any suggestions on projects you think the committee should consider to undertake, and services it should provide to members. Please email them to me.

Serving on the Executive Committee

If you have time to participate in the running of the APBC, consider joining the executive committee.  We hold a teleconference every first Tuesday of the month from 5:00pm to 6:00pm.  You can participate in the teleconference virtually from wherever you are at that time.


Millie Telan, President

BPO Update

by Richard Mann, Vice President NSW

Process Outsourcing (BPO) industry  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 the economy. Majority of these investments come from call center giants, which makes up 70% of the whole BPO industry in the country. Now, the BPO industry 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 has 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 supposed 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 their respective companies here in the Philippines. The Philippines is also home to a wide range of skilled workers, ready to cater 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 can 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.

Mining Update

by Gavan Collery, Vice President, Vic.

Industry and government discuss Philippine mining future

During September, the Philippine mining industry came together under a ‘Mining Philippines’ banner to discuss issues and project development as well as receive input from government.
So important was the forum, and off the back of ongoing perceived slowness of support for mining from various forms of government in the Philippines and a consequent uncertainty about whether foreign companies should commit to investment there, even foreign governments (including Australia and China) were well represented.

The keynote address to the forum was to have been delivered by no less than President Aquino. He was a last minute apology due to other commitments, but his Executive Secretary stepped into the breach to deliver the President’s personal message which held out hope for foreign investors under the banner of ‘responsible mining.’

A key issue of concern for domestic and foreign mining interests in the Philippines has been an ongoing moratorium on processing of mining applications either for exploration or production. This has been compounded by the national government’s ‘use it or lose it’ policy on these permits; an issue made even more challenging by slowness of government to process applications mostly due to public service capacity.

The Secretary responsible for mining in the Philippines is Ramon Paje, the Secretary for the Department of Environment and Natural Resources. He addressed the conference, and industry representatives were greatly appreciative of his attendance.

Secretary Paje told the gathering of 400 or so delegates that the government plans to resume processing permit applications, saying: “the immediate action plan is to lift the moratorium on the acceptance and grant of mining applications.’ His message was well received, and gives promise to a new surge in activity in this sector which the Philippine Government ranks as its ‘number four priority’ for economic growth.

Of remaining and considerable concern to the mining industry are two issues – ongoing creation of what appears to be NGO-driven anti-mining and even anti-foreign investment ordinances at a provincial level (in defiance of national law) and proposals by the national government not only to introduce a new and additional mining tax or royalty under the guise of a concept known as ‘minerals reservations,’ but also a plan to auction off mining permits instead of the tried-and-true practice of granting them on a ‘first come, first served’ basis.

On a project or corporate level, considerable progress has been made in taking the world-class Tampakan Copper-Gold Project (southern Mindanao) towards approval to proceed. The immediate challenge was to successfully conduct a series of very public consultations to discuss environmental management, and these went very well, with a high degree of constructive community engagement. Australian company Indophil Resources holds a 37.5% interest in this project, with Brisbane-based Xstrata Copper playing the lead management role on behalf of the government and people of the Philippines.

OceanaGold’s Didipio Gold-Copper Project at Nueva Vizcaya appears to be making good headway in infrastructure construction. OceanaGold is targeting production in the  first quarter of 2013.

Mindoro Resources has reported what it describes as ‘very encouraging’ drill hole results at its Lobo (Batangas) gold prospect. The new program is designed to test the continuity and extent of the existing Southwest Breccia gold shoot.

At Medusa Mining, they are set to undertake a $70m remodelling of the Co-O gold mill and mine to increase capacity. Medusa is also encouraged by drilling results at its Bananghilig Gold Deposit (Tambis Project, north of Co-O).

Economy

ADB trims forecasts for PH

Growth forecasts for the Philippines have been trimmed by the Asian Development Bank (ADB), which warned of renewed external risks and called for more governance reforms. The Manila-based institution’s latest Asian Development Outlook 2011 forecast gross domestic product (GDP) growth of 4.7% and 5.1% for this year and the next, down respectively from April’s outlooks of 5.0% and 5.3%. The figures are lower than the government’s 7-8% growth target for both years and the assumptions (5.0-6.0% for 2011 and 5.5-6.5% for 2012) used in the national budget. The revisions were in line with lower forecasts for developing Asia, which the ADB now expects to grow by 7.5% this year and the next from 7.8% and 7.7% previously. The Southeast Asian growth forecast was also trimmed to 5.4% and 5.6% for 2011 and 2012 from 5.5% and 5.7%, respectively.

Fiscal gap seen to breach P200Bn

The government’s budget deficit could reach just “upwards of P200 billion” this year as underspending in the first half takes its toll, according to Finance Secretary Cesar Purisima said.

At the same time, he insisted that the government would continue to pursue the programmed cap of P300 billion this year, equivalent to 3.2% of gross domestic product. The deficit totaled just P43.713 billion as of July -- barely 15% of the full-year ceiling -- mainly due to lower-than-programmed spending in the first semester. Government agencies reviewed costing of projects in the first half, causing delays in their implementation. Consequently, state spending dropped to P698.871 billion as of June, far from the target of P838.547 billion. It was also more than a tenth below the P788.833 billion spent in the first semester of 2010.

OFW inflows up 6.3% to $11.35Bn in Jan-July

The BSP reported that remittances by Filipinos working abroad climbed 6.3% in the first 7 months of the year on the back of the sustained demand for skilled Filipino manpower amid
the economic growth concerns in the U.S., the debt crisis in Europe, as well as the tensions in the Middle East and North African (MENA) states. BSP Governor Amando Tetangco Jr.
said the amount of money sent home by Filipinos abroad to their loved ones in the Philippines amounted to $11.35 billion from January to July, or $672 million higher than the $10.679
billion remitted in the same period last year. Remittances from land-based Filipino workers inched up 4.3% while that from sea-based workers rose 14.1% during the period. About 83%
of the total remittances came from the U.S., Canada, Saudi Arabia, the United Kingdom, Japan, Singapore, United Arab Emirates, Italy and Germany.

Optimism bounces back

Optimism among Filipinos has risen following a first-quarter tumble, the Social Weather Stations (SWS) said in a new report detailing the results of a June survey. The SWS poll, conducted from June 3-6, found 36% of the respondents expectant that their lives would improve in the next 12 months, with those claiming otherwise accounting for 9%. The difference between the 2 resulted in a “high” net personal optimism score of +27. The result was a 3-point improvement from March’s similarly “high” +24, which was down markedly from the near record “very high” +35 hit in November 2010. Net personal optimism scores have been over +20 in the last 2 years, the SWS said, since net +24 in September 2009. The peak of +36 was hit in June 2010, attributed to the change in government following elections a month earlier. The respondents’ outlook on the economy also improved, with 29% optimistic it would get better in the next 12 months and 16% forecasting a worsening. The net economic optimism score of +14 was described by the SWS as a “recovery to double-digit positives” -- the March score was +4 -- but it also noted that the +29 to +39 levels hit during the June to November period last year were better.

Business

Lengthy procedures, corruption still a turnoff

The Philippines is still considered an alternative site for Japanese firms now looking to relocate from their homeland, but the country has to do more to make its investment climate more friendly, a senior official of the Japanese chamber said. This, as trying conditions due to a strong yen, poor growth prospects and lingering effects of the disasters that struck in March have made it even more attractive for Japan-based firms to consider neighboring alternative locations. “Japanese companies suffer a profit loss if calculated in Japanese yen, actually, but branch companies here [in the Philippines] are enjoying profit,” Nobuo Fujii, executive director of The Japanese Chamber of Commerce and Industry of the Philippines, Inc. (JCCIPI), said via e-mail. “Some Japanese companies have decided to relocate outside of Japan to ASEAN no(Association of Southeast Asian Nations) countries, t China,” he noted. The Philippines, Mr. Fujii noted, seems to have a competitive edge over some of its neighbors -- even with their more developed industrial bases and business-friendlier policies -- due to location and quality of work force.

Investments up 76.27% to P437.867Bn in Jan-Aug

Investments for the first 8 months of the year went up by 76.27% to P437.867 billion from P248.411 billion a year ago, according to a report from the Board of Investments (BOI) and the Philippine Economic Zone Authority (PEZA). For PEZA alone, investments went up by 60% for the first 8 months to P113.603 billion from P70.958 billion a year ago. The number of projects likewise went up to 426 projects from 332 projects last year. BOI-registered investments, on the other hand, went up by 82.73% to P324.264 billion from P177.453 billion a year ago. BOI officer-in-charge Lucita Reyes said the number of projects were greater this year at 210 from only 112 during the same period last year. Of the 210 projects, 112 are mass housing. Energy emerged as the top sector in terms of project cost with P87.443 billion, followed by oil projects with P74.798 billion. The third was mass housing with P62.658 billion and the fourth was mining with P60.458 billion.

PEZA revises 2011 target

The Philippine Economic Zone Authority (PEZA) has revised its yearend target to 11-11-11 following a robust performance in first 8 months. PEZA Director General Lilia De Lima announced that they are revising their 10-10-10 growth target to 11-11-11. This means that PEZA now expects investments, employment target and exports to grow by 11% by the
end of the year. For the first 8 months of the year, investments went up by 60% to P113.603 billion from P70.958 billion a year ago. The number of projects likewise went up to 426 from 332 last year. Export earnings meanwhile are expected to hit $23.941 billion. This is the highest investment since 2001. The other attached agency of the Department of Trade and Industry (DTI), the Board of Investments (BOI) has likewise revised its yearend target.

Mining investments could double

New mining investments could reach $2.8 billion this year, double an earlier forecast if Chinese firms that have expressed interest follow through in the fourth quarter, a Mines and Geosciences Bureau (MGB) official said. This came as the Chamber of Mines of the Philippines also said it was willing to pour in $13 billion over the next 4 and a half years if the government improves the approval process. MGB director Leo Jasareno said the initial investment target of $1.4 billion could double if investors that expressed interest during President Aquino’s state visit to China a few weeks ago actually put money into the sector. New mining investments had reached 40% of the $1.4 billion forecast as of the first half. The government also set to announce 5 mining projects worth a total of $8 billion that will start from next year until 2016.

Company News

Toyoto Phils. to raise local content of Vios and Innova

Toyota Motor Philippines Corp. (TMPC) is planning to infuse an additional investment of P450 million to increase the local content of Vios and Innova as part of its campaign to use domestically produced parts for the 2 vehicles assembled in its Sta. Rosa plant. TMPC vice chairman Alfred Ty said that they will modernize their stamping plant in order to increase their local content…the plan of Toyota is to increase its local content to 40%.

Major drilling group now in PH

Brunswick-based Major Drilling Group International Inc. is establishing a presence in the Philippines through the recent acquisition of Bradley Group Limited which already has a footprint in the Philippines. Major Drilling announced last week that it has entered into an agreement to acquire all of the issued and outstanding shares of Bradley Group Limited, a family-owned drilling company based in Rouyn Noranda, Quebec, for $80 million.

South African gold fields to invest in PH

The South African Gold Fields Group plans to invest $800 million in the Philippines over a 5-year period, Mines and Geosciences Bureau director Leo Jasareno said. In an interview at the opening this week of the Mining Philippines 2011 exhibit at the Sofitel Hotel in Pasay City, Mr. Jasareno said they expect the South African mining group to seek an FTAA (financial and technical assistance agreement shortly.

Infrastructure