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Philippine business news, data, activities and opportunities

Darker clouds ahead
Philippine central bank governor Amando Tetangco forecasts inflation may peak at 10-11 percent in the third quarter with no let up in rising fuel and food prices. And the International Monetary Fund has cut its 2008 economic growth forecast for the Philippines to 5.2 percent from 5.8 percent due to slowing external demand and softening consumption.    [Philippines Inc.] 

PHILIPPINE BUSINESS DIARY

Design on display, until August 23
Some of the best work of Filipino industrial and commercial designers is on show in an exhibition at the Metropolitan Museum of Manila.
The exhibit has been organized to celebrate the 35th anniversary of the Product Development and Design Center of the Philippines. Participating designers are Mark Victor Bautista, Redemptor Bitantes, Bettina Bonoan, Patrocino Catuncan, Dante Cruz, Manuel Dacanay Jr, Marian Dacanay, Josefina De Laza, Eduardo Deleña Jr, Arturo Delgado Jr, Emmanuel Delingon Jr, Viña Domingo, Joel Enriquez, Olivia Loyola-Enriquez, Maria Rita Badilla-Gudiño, Luis Manalang, Oscar Mapua, Benjamin Sixto Molina Jr, Petite Brodett-Olbes, Ramon Pabillon, Valeriano Padilla, Zenaida Zagala-Pineda, Rowe Requejo, Maria Felicitas Reyes, Celino B. Santiago, Ana Maria Veronica Solano, Rey Soliven, Grace Enriquez-Sy, Majella Antonia Tresvalles and Vanessa Umali.
The exhibit continues at the Metropolitan Museum, which is in the Bangko Sentral ng Pilipinas Complex on Roxas Boulevard, until August 23.

American bazaar, July 8
The American Women's Club of the Philippines has its next monthly bazaar on July 8 (8.30am-3pm), with about 300 stalls selling mainly Philippine-made handicrafts, art, clothing and accessories, textiles, furniture, homeware and food, at the World Trade Center Metro Manila in Pasay City.

Communicating with confidence, July 9
“How to communicate with clarity, credibility and confidence” will be taught by actor, coach and motivator Vivien Mangalindan at a one-day seminar in Manila on July 9. It’s being organized by RMP Consultancy and will be held in the company’s training room in Languages Internationale Building, Makati City.
Participation: 7,840 pesos including lunch and snacks. Information and registration: RMP Consultancy, email seminars@rmpconsultancy.com, phone +632 396 5425 or +632 372 4563.

Promoting workshops, July 11
American author and consultant on internet marketing Fred Gleeck is coming to the Philippines to conduct a workshop on "Marketing and promoting seminars and workshops." It’s being held on July 11 (1pm-6.30pm) in the East Tower Penthouse of the Philippine Stock Exchange Building in Ortigas Center, Pasig City, Philippines.
Participation: 3,995 pesos. Registration: Global Knowledge Associates, Inc., phone + 632 637 3657 or +632 683 0969, email roselle@globalknowledgeph.com.

Australia-NZ networking, July 15
Australian and New Zealand businessmen in the Philippines and their guests get together soon for the monthly membership meeting of the Australian-New Zealand Chamber of Commerce in the Philippines. Australian Ambassador Rod Smith and New Zealand Ambassador David Pine will be guest speakers at the evening, to be held on July 15 (6pm) at the InterContinental Manila Hotel in Makati City.
Information: AnzCham secretariat: email membership@anzcham.com, phone +632 755 8840.

HR, Penn State style, July 24-28
Reinvention of the human resources role in companies and organizations is promised at an upcoming three-day workshop in Manila. The certificate program will be along the guidelines taught at Pennsylvania State University in the United States, a leader in the HR field.
The senior management level workshop will be conducted by William J. Rothwell, Penn State’s Professor of Human Resource Development at the University Park campus, and an author and consultant on the subject.
It’s being held on July 24, 25 & 28 at the InterContinental Manila hotel in Makati City. Participation: 35,000 pesos until May 39, then 37,500 pesos until June 30; and 40,000 pesos thereafter. Registration: ITD Consulting Group, phone +632 887 7428, email itd_events_ph@itd.com.my.

Foreign employment expo, August 13-14
Jobs with foreign companies working in the Philippines are on offer at the upcoming Foreign Chamber Employment Expo 2008 in Manila. It’s being held at the Trinoma Activity Center in Quezon City on August 13 & 14 (10am to 8pm).
Employers looking for staff at the jobs fair are mainly members of the American, Australian-New Zealand, British, Canadian and European chambers of commerce in the Philippines. They’re paying between 15,000 and 50,000 for sponsorship and booths at the expo.
Information: The secretariats of the respective chambers.

ITB Asia tourism expo, October 22-24
Messe Berlin, organizer of the world’s largest travel trade show, ITB Berlin, and the Singapore Tourism Board, have confirmed plans for Singapore to host the first-ever Asian edition of ITB. To be held at Suntec Singapore during October 22-24 2008, ITB Asia already has over 100 confirmed exhibitors from 32 countries.
Exhibitors include 30 national tourism organizations including those of Germany, Maldives, Spain and Singapore; major travel firms such as Silversea Cruises, Orient Express Travels & Tours, Commonwealth Travel Service and Hong Thai Travel; accommodation groups including Fairmont Hotels & Resorts, Marina Bay Sands, Millenium & Copthorne International, Starwood Asia Pacific Hotels & Resorts Pte Ltd, Swissotel Hotels & Resorts, and Taj Hotels Resorts and Palaces.

Soiree Beaujolais, November 20
The French community in the Philippines and their guests celebrate the annual new bottling of Beaujolais Nouveau wine with a gala party scheduled for November 20. The happening is organized by Le Club French Chamber of Commerce in the Philippines and this year coincides with the chamber’s 20th anniversary so the party will be even bigger than usual.
Soiree Beaujolais includes bottomless Beaujolais Nouveau, fine food, music and dancing, plus a raffle for a wide range of major prizes donated by sponsors. It’s being held in the Harbor Garden Tent at the Sofitel Philippine Plaza Manila hotel.
Information: Stéphane Khaled, Le Club, email stephane.khaled@leclub-fcc.org, phone +632 813 9005.

PHILIPPINES INC.

Economic slowdown forecast
The International Monetary Fund has cut its 2008 economic growth forecast for the Philippines to 5.2 percent from 5.8 percent due to slowing external demand and softening consumption.
"Growth is expected to slow and inflation will likely remain elevated," predicts a statement from an IMF team which visited Manila earlier this month. "Continued prudent macroeconomic policy management is needed to navigate through the challenging times ahead."
The IMF said inflation is likely to stay close to double-digit levels in the coming months but the central bank's monetary policy is appropriately hawkish. Inflation hit a nine-year high of 9.6 percent in May and Philippine central bank governor Amando Tetangco forecasts inflation may peak at 10-11 percent in the third quarter with no let up in rising fuel and food prices.
The central bank raised its headline policy rates by 25 basis points this month, the first increase in nearly three years, and Tetangco said the economy could weather further interest rate rises that may be necessary.
The Philippine government expects economic growth to slow this year to 5.7 to 6.5 percent, weaker than its earlier target of 6.3 to 7.0 percent, after hitting a three-decade peak last year of 7.2 percent.
Annual growth in the first quarter slowed to 5.2 percent, well below expectations and down sharply from the previous quarter's 6.4 percent expansion as rocketing inflation, a slowdown in the United States and the soaring cost of imported oil took their toll.
Anxious to support the economy, the Philippine government has abandoned its goal of balancing the budget this year. Manila now expects to post a budget deficit of as much as 75 billion pesos, or one percent of gross domestic product, as it spends more on infrastructure and social services in a bid to pump prime the slowing economy.
But the IMF believes the Philippines must protect its fiscal program for 2009, when it expects to post a small budget deficit, to convince investors the country is committed to its fiscal consolidation program.
"The mission is supportive of a targeted increase in pro-poor spending that may entail a modest fiscal deficit in 2008, but it is important to protect the 2009 fiscal program," the IMF statement said. "The recent reduction in public debt, from about 100 percent of GDP in 2003 to 62 percent in 2007, has provided some scope for increased social spending."
The IMF said the government should adopt legislation, possibly on reforming fiscal incentives and tax administration, to recover lost revenue from recent reforms in personal income taxation and a planned reduction in corporate income taxes in 2009.

Exports down, imports up
The Philippines plans to revise down slightly its export growth forecast for 2008 and raise its import growth estimate as oil prices continue to rise, official documents show.
Export growth this year is now seen at 5 percent from an earlier downgraded forecast of 6 percent and imports are seen rising 10 percent against an earlier forecast of 7 percent. "Import growth is price driven due to the elevated price of oil and rice," the documents state.
The Philippines imports nearly all of its crude oil needs and was the world's biggest rice importer this year after it contracted a total of 2.4 million tonnes of the grain to offset a shortfall in production.
In the first three months of this year, the Philippines' trade deficit ballooned to $2.1 billion compared to a $181 million surplus a year ago. Just last month, the government revised down its original 2008 export growth forecast of 8 percent and import growth of 9 percent. Merchandise exports grew 6 percent last year and imports rose 6.8 percent.
Demand for the Philippines' key electronics and semiconductor exports has been hit this year due to the slowdown in one of its main export markets, the United States.
The central bank has lowered its forecast for this year's balance of payments surplus to $2.5 billion from an original projection of $3.4 billion partly due to expectations of weaker exports.
Meanwhile, Philippine imports in April rose 11.8 percent from a year earlier as the rising cost of fuel and food purchases masked a 10.7 percent annual drop in electronics imports that signals weaker export growth ahead.
Shipments of electronics parts dominate imports and are used as inputs for the country's key semiconductor exports. The sector is feeling the effects of a slowdown in US demand that is putting pressure on the Philippines' trade balance.

Foreign investment healthy
Net foreign direct investment into the Philippines grew 94.4 percent to US$208 million in March from a year earlier despite global economic uncertainty.
Net FDI in the first quarter of the year reached $551 million, down about 60 percent from the same 2007 period, the bank said, adding that the first quarter of the previous year was marked by a significant infusion of capital into a local beverage company.
The new investments – which came mostly from the United States, Japan, Malaysia and South Korea – were channeled into the manufacturing, services, mining, construction, real estate and financial sectors.
The central bank expects foreign direct investment to reach $4.2 billion this year from $2.7 billion in 2007 as investments in the mining, shipbuilding and construction sectors take off, despite global uncertainties.

Manila achieves budget surplus
The Philippines posted a budget surplus of 7 billion pesos in May, helped by double-digit growth in revenue collection and sluggish expenditure growth, despite higher fuel and food subsidies for the poor.
Spending rose 4.1 percent on year in May to 99.9 billion pesos, while revenue surged 14 percent on year to 106.9 billion pesos.
The deficit was 1.8 billion pesos in May last year.
Last month's surplus helped narrow the five-month budget deficit to 18.8 billion pesos, from the 41.8 billion in the year-earlier period.
The government earlier abandoned its plan to balance the budget this year to assist the poor in coping with higher consumer prices and prop up the economy as external demand has slowed.
The deficit is expected to be capped at one percent of gross domestic product, or 75 billion pesos, suggesting wide budget deficits in the months ahead.

Jobless rate hits 8 percent
Unemployment in the Philippines' climbed to 8 percent in April, the highest in nearly two years, as economic growth slows in the face of soaring inflation. The Philippines, with one of the highest unemployment rates in Southeast Asia, has begun to distribute cash subsidies, loans and discounted rice aimed at cushioning the impact of high prices of basic commodities, such as food and fuel, on the poor and unemployed.
The percentage of underemployed, or those who have jobs but want to work more, climbed to 19.8 percent of total employed in April from 18.9 percent in January, according to a quarterly labor force survey of the government statistics office.
Of the total employed in April of 33.5 million – more than a third of the country's total population of 90 million – half were in the services sector, more than a third were in the agricultural sector and the rest were in industry.
More than half of the employed were wage and salary workers from the private sector, government agencies and private households. Slightly over a third were self-employed while the rest were unpaid family workers, mostly from the agriculture sector.
Philippine President Gloria Arroyo vowed to create 1 million jobs a year but has largely failed to deliver on that promise partly due to budget spending restraint as the government focused on controlling its fiscal deficit and a dearth of foreign direct investment.  

Samsung eyeing big chip plant
Samsung Electronics Company Ltd, the world's largest maker of memory chips, is in talks about building a manufacturing plant in the Philippines. "There was encouraging progress in the talks with the group," reports government Trade Secretary Peter Favila.
Favila said officials of the Clark Development Corporation, or CDC, which oversees an industrial zone on the site of the former Clark American military base north of Manila, have been in talks with Samsung for some time. Asked to confirm reports that $1 billion is the size of the possible Samsung investment, Favila said: "It's possible, given the kind of activity that they will be undertaking."
CDC president Liberato Laus and other top officials have been in South Korea for further talks with Samsung.
Ahn Jae-kwang, a Samsung Electronics spokesman, said only: "We are exploring various opportunities in Southeast Asia but no decisions have been made."
The company said in March it was conducting a study in Southeast Asia, including the Philippines, to possibly build an electronics plant.
Electronics, largely assembled from imported parts, account for over 50 percent of export revenue in the Philippines, which wants to expand its role as a hub for electronics firms seeking low-cost manufacturing bases.
Texas Instruments, the world's top mobile phone chip maker, has already started construction on a $1 billion semiconductor plant in the Clark industrial zone.
According to some reports, an area in Clark has already been reserved for the Samsung project, which would be used for the design and manufacture of integrated circuits or chips which are found in almost all modern electrical equipment, including microprocessors, audio and video equipment, and cars.
Samsung already operates an optical disk drive manufacturing plant south of Manila. It also has a unit, Samsung Electro-Mechanics Philippines Corporation, which manufactures multi-layer capacitor thick film chip resistors. 

CORPORATE BUSINESS

China eyeing big iron venture
China is looking into investing in an iron ore prospect in the southern Philippines, a venture that could involve billions of dollars in capital. Environment Secretary Joselito Atienza says state-owned China Metallurgical Group Corporation is in talks with indigenous communities in the prospect area on the Zamboanga peninsula in Mindanao.
If the prospect proves to be economically viable, the company will put up a processing plant with an initial investment of US$1.5 billion, Atienza said.
The Mines and Geosciences Bureau in Manila said the company has yet to file an exploration permit.
Levy Teodoro, an official of the bureau's mining tenements division, said the Philippines, which is known mainly for gold, copper and nickel production, has largely undeveloped iron ore potential, including deposits in Mindanao. "The Philippines produced iron ore in the 1950s and the 1960s, but the operation became non-viable when metals prices tanked," Teodoro said.
With metals prices on the rebound, driven mainly by demand from China and the developing world, the Philippines is aggressively promoting mining investments to revive the sector.

Tampakan mine battle deepens
The Australia-listed firm Indophil Resources, the target of competing takeover bids, has lifted its stake in the Tampakan copper and gold mine in the Philippines by 1.73 percent.
Indophil is looking to increase its stake in the mine to 37.5 percent. It said it now has 34.23 percent, compared with Xstrata's 62.5 percent interest.
Xstrata is looking to take control of Indophil and last week increased its bid to match a rival consortium bid.
The two firms are locked in a bitter contest for a giant undeveloped copper mine in the Philippines. Xstrata's initial A$398 million offer for Indophil, with which it co-owns the Tampakan lode in the southern island of Mindanao, was trumped by a A$488 million offer from a consortium of investment groups Crosby Capital and Alsons Group and Indophil chief executive Richard Laufmann.
The Tampakan deposit holds 11.6 million tonnes of copper and 14.6 million ounces of gold, and if in production today would rank as one of the world's richest. Discovered in 1991, the mine has never left the drawing board, dogged by environmental and economic problems, political instability and laws restricting foreign ownership.
Last month, Lion Selection, Indophil's largest shareholder with 25.4 percent, agreed to sell 17.8 percent to Xstrata.
Xstrata has been buying copper, zinc and coal mines in Australia and nickel deposits in Canada and Africa as it builds up a diversified commodities operation in the face of surging global demand, especially from the growing economies of China and India.

Court rules for mine firm
The Philippine Court of Appeals has temporarily set aside an order barring Australian miner OceanaGold from operations at a gold-copper project in the north of the country. The court said in a ruling it is restraining the local government in the province of Nueva Vizcaya from acting on a cease-and-desist order against Oceanagold for a period of 60 days.
The cease-and-desist order was issued by provincial governor Luisa Cuaresma after the firm declined to pay 30 million pesos for a quarrying permit. The central government has already said that Oceanagold need not pay for the permit since it is not doing any quarrying work.
The court said it was also told that police and troops had forced their way into the Oceanagold premises to block mining operations and created "an atmosphere of tension and antagonism in the locality."
"All these circumstances combined sufficiently to convince this court of the necessity of a temporary restraining order, so as to avert further hostilities and to avoid this controversy from spiraling into more violent proportions," it said.
Only around US$1 billion has flowed into the Philippine mining industry in overseas investment since 2004 but the government is hoping this will surge to $10 billion within the next three years due to record commodity prices and the country's proximity to resource-hungry China.
But local governments, land ownership disputes, communist and Muslim insurgencies and bureaucratic red tape can hold up projects in the Philippines for decades, despite the central government's public support for the sector.
OceanaGold has so far raised about $200 million to develop its Didipio site in Nueva Vizcaya, about 270 km north of Manila.
The mine is expected to produce around 120,000 ounces of gold and 15,000 tonnes of copper concentrate a year in the first 10 years of production. In 2009, while it is still ramping up output, Didipio is expected to produce around 60,000 ounces of gold. The mine is expected to have a minimum life of 15 years.

Galoc oil delayed again
First oil from the Philippines' Galoc oilfield is expected in early July after Typhoon Frank brought commissioning work to an halt, adding to a series of delays, says equity holder Otto Energy.
The floating production storage and offloading system that is to extract 17,500 barrels per day from the offshore field was disconnected ahead of the typhoon's passage.
This is the latest in a series of delays that have seen the field's startup repeatedly postponed from initial plans for a first quarter 2008 startup.
The Galoc field has great significance, not only for the Philippines, whose meager output it will hike by some 70 percent to slightly more than 40,000 bpd, but also for Otto Energy and Nido Petroleum, two small independent Australian companies that have bet on the under-explored Philippines. Galoc will be Otto Energy's first oilfield to come onstream.
Otto Energy holds an 18.3 percent indirect interest in the field via a 31.38 stake in operator Galoc Production Company, with European trader Vitol holding the remaining 68.62 percent. GPC operates the Galoc field with a 58.29 percent interest. The remaining 41.71 percent is split between Nido Petroleum, with a 22.28 percent share, and several Philippine partners.
Vitol, and European trader Trafigura, will be the two main marketers of the light sweet crude.
Galoc comes as a relief for the Philippines, which is trying to cut its annual import bill of $6 billion and is reeling from soaring fuel and food costs which have pushed annual domestic inflation to record highs.

Manila casino for Packer?
Australian gambling and media tycoon James Packer is expected to sign a US$1.5 billion deal to build a hotel and casino resort in the Philippines. Dodie King, spokesman for the government-run Philippine Amusement and Gaming Corporation, said he expects a deal will be signed with Packer “within the next few weeks.”
Packer’s resort will form part of a $20 billion project which PAGCOR hopes will turn 120 hectares of reclaimed land on Manila Bay into one of Asia’s biggest gaming destinations on par with Macau. PAGCOR, which regulates and issues gaming licenses in the Philippines, unveiled the multi-billion dollar project in April and has attracted interest from around the world.
King confirmed media reports that the Packer deal is being negotiated through Bloomsbury Investments, which has already paid a deposit of $100 million toward a 1,700-room resort and convention complex.
Four other companies have reportedly expressed interest in the project: Japan’s Aruze Corporation, Genting Group from Malaysia and Star Cruises, and SM Investments Corporation of the Philippines. So far, only Genting has been granted a license to operate a casino.
It is expected that companies investing in the project will spend up to $3 billion each building hotels, casinos, entertainment complexes and a golf course.

Jollibee buys Taiwan group
Philippine fast-food giant Jollibee Foods Corporation is acquiring 70 percent of Taiwanese restaurant chain Lao Dong for 61.1 million pesos. In a disclosure to the Philippine Stock Exchange, the publicly-listed Jollibee said that as part of the sale, it will invest an additional 30.6 million pesos while Lao Dong's owners will put 13.1 million pesos into the new joint venture. The new venture will work to expand Lao Dong's restaurant chain in Taiwan and China.
The owners of Lao Dong will help Jollibee develop food products and other services for its business units in China, the Philippines and other countries.
Jollibee is the biggest restaurant chain in the Philippines, operating almost 1,500 outlets for its signature Jollibee hamburgers and chicken dishes along with pizzas, baked goods, French pastries and other dishes.
It also has 194 outlets abroad including China, the United States, Dubai and Indonesia.
Lao Dong, a full-service restaurant specializing in noodles, has eight outlets in Taipei, the disclosure said. Last year, Jollibee acquired the Chinese restaurant chain Hongzhuangyuan for about US$50.5 million.

Manila keeping Petron stake
The Philippine government has turned down the London-based Ashmore Group's tender for its 40 percent stake in Petron Corporation. Selling would have left the government without a stake in the country's biggest oil refiner, which Energy Secretary Angelo Reyes said was "not a nice idea."
"It [the Ashmore Group] is better off with a 40 percent (stake)," he said. The Ashmore Group bought 40 percent of Petron from Saudi Aramco last month for US$550 million and then tendered for the 60 percent it does not already own for about $827.23 million.
Listed Petron is 40 percent owned by the Philippine government with 20 percent owned by small investors.
Philippine law requires an entity acquiring at least 30 percent of a listed company to tender for the rest of its equity over 12 months to protect shareholder interests.
Reyes said the government would only sell its stake at the right time and at a premium. "We have to sell it to the most advantageous and most beneficial (price) for the shareholders," he told reporters, without specifying a price.
Petron, the Philippines' top oil refiner, has 9.375 billion outstanding shares and a market capitalization of 55.3 billion pesos.
Saudi Aramco bought its stake in 1994 for $535 million.

PNB-Allied merger okayed
Shareholders of Philippine National Bank and Allied Banking Corporation, both majority owned by tobacco and airline tycoon Lucio Tan, have approved the US$564 million takeover of Allied by PNB to create the Philippines' fourth biggest bank by assets.
PNB will issue 457 million new shares at 55 pesos per share to buy all of Allied Bank's common and preferred shares in a deal expected to close in the third quarter.
The enlarged bank will have net profits of about 3.5 billion pesos this year, up 5 percent from the two banks' combined net income in 2007, says PNB president Omar Mier. Mier expects one-time costs related to the takeover to total 1.2 billion pesos in the next 12 months.
After the deal, the Lucio Tan group will have an 81 percent share in the bank.
PNB's net income climbed 50 percent in 2007 to reach a 10-year high of 1.23 billion pesos, while Allied Bank's net income rose 3 percent to 1.88 billion pesos last year.
PNB is the leading provider of banking services for millions of Filipinos working abroad and remains a government depository bank even after the state sold its remaining shares in the bank through a secondary share offer worth $13 million last year.

Workers sending more home
Remittances from Filipinos working overseas rose 18.35 percent year-on-year in April, accelerating sharply from 9.4 percent annual growth in March. Remittances for April reached US$1.4 billion as workers, including nurses, IT professionals, sailors and maids, sent home money ahead of the start of the school year in June, when families need to pay for fees, books and uniforms.
The inflow in the first four months of the year amounted to $5.4 billion, 14.5 percent higher than a year ago.
Remittances from over 8 million Filipinos, representing around 10 percent of the population, have boosted domestic consumption and the inflow is a cornerstone of the economy.
The central bank said this year's inflow has been supported by a 14 percent increase in the number of Filipinos gaining work overseas in January to April and due to the growing efficiency of banks and other financial institutions as remittance channels. Remittances coursed through formal channels are expected to rise almost 9 percent to $15.7 billion in 2008.
The bulk of the remittances came from the United States, the Middle East, parts of Western Europe and elsewhere in Asia.

BUSINESS OPPORTUNITIES

Philippine resort investment
A special resort investment opportunity is available in the Philippines, on the Nasugbu coast, a fast-growing tourism and residential region south of the capital Manila. We have the opportunity to purchase an existing seafront resort plus adjacent property suitable for development, at an attractive price.
Serious investors (about US$500,000 per share) are invited to join the select group who will purchase and develop the property and resort assets as an ongoing business for expansion.
Project details: email Nasugbu Resort Development.

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