POLITICS

The Department of Finance (DOF) is pushing for the restructuring of the excise tax on automobiles to help deal with the worsening traffic crisis in Metro Manila and other urban centers. According to Secretary Carlos Dominguez III, the implementation of the automobile tax increase would begin in 2018 under the DOF timetable.

The Asian Development Bank (ADB) has approved $250 million worth of loans to the Philippines aimed at raising local government units’ (LGUs) revenues to better provide public services to communities in the country. The program is being implemeted by the Department of Budget Management (DBM), Department of Interior and Local Governement (DILG) and the DOF’s Bureau of Local Government Finance.

President Duterte gave assurance to relax foreign ownership limit citing his plan to change the Constitution’s 40 percent foreign ownership cap – adding that a plebiscite seeking the approval of Charter changes could happen alongside the 2019 mid-term elections. He also added that he has no problem with foreign companies owning 100 percent of public utilities as long as they pay their taxes, however, emphasized that land ownership will remain restricted.

 BUSINESS

Thai hotel giant The Erawan Group PIc. is investing P3.6-billion in the Philippines to build about 20 three-star hotels by 2020. Erawan Group’s President Kamonwan Wipulakorn is confident of the continuous growth of the country’s economy and tourism industry making them choose Philippines over Indonesia for their expansion outside Thailand.

This month, the country’s manufacturing industry exhibited signs of continued growth, although at a slower pace, due to concerns over traffic congestions, bottlenecks and price movements associated with the holiday season.

 ECONOMY

International credit raters S&P Global Ratings and Moody’s Investors Service recently reported that the Philippines remains a viable destination for foreign investors as fiscal and economic policies remain intact despite political risks noting that unblemished growth story should sustain optimism.

Preliminary results of the Philippine Statistics Authority’s (PSA) 2016 Annual Estimates of Labor Force Survey (LFS) showed that the unemployment rate declined to 5.5 percent in 2016 from 6.3 percent last year. Employment rate hence rose to 94.5 percent from 93.7 percent last year.

The Bangko Sentral ng Pilipinas (BSP) Director for Economic Research  sees a sustained four percent growth in cash remittances next year amid strong demand for skilled Filipino workers abroad.

According to National Economic Development Authority (NEDA), the Philippine economy may breach 6.5 percent to 7 percent growth target for 2016 if fourth quarter performance will be higher than expected. The World Bank also revised upward its growth projection for the Philippines.

 INVESTMENTS

The Board of Investments (BOI) recently reported a surge in the value of investments approved in November by 97 percent to P28.5 billion due mainly to the big ticket power and petrochemical projects registered during the month. This brought total investment commitment aprovals from January to November this year to P324.5-billion, up by 35.5 percent from the P239.52 billion registered for the same period in 2015, according to Trade Secretary Ramon Lopez.

Investment commitments in 2016 surpassed its target, soaring 20.4 percent to P441.8-billion from the P366.7-billion recorded in the previous year, according to BOI. The jump in investment pledges was driven by the continued confidence of investors with the country’s sustained macroeconomic fundementals and  in President Duterte’s socio-economic agenda, Trade Secretary and BOI chairman Ramon Lopez mentioned.

 INFRASTRUCTURE

In a bid to entice investors to set up shop in rural areas, the government is planning to construct more roads leading to key manufacturing and economic zones. The Department of Trade and Industry (DTI) and Department of Public Works and Highways recently launched a “convergence” program aimed at putting in place more roads in ecozones.

Leaders of the House of Representatives are supporting the construction of a 65-kilometer coastal highway from the Subic Free Port to Manila to degongest Metro Manila.

 ENERGY

The 135-megawatt (MW) coal plant of Palm Concepcion Power Corp. (PCPC) in Iloilo worth $280-milllion was recently inagurated by President Duterte, boosting power supply in the Visayas.

 AGRICULTURE

To help farmers fight banana diseases and boost their output, the House Committee on Agriculture and Food revealed that it has recently approved a measure calling for the establishment of the Philippine National Banana Research and Development that will undertake scientific research.

Secretary Emmanuel Piñol mentioned that the Department of Agriculture (DA) will inspect all inbound shipments of agricultural goods and food before the Bureau of Customs (BOC) evaluates the tariffs for these imports. 

 TOURISM

The flag carrier Philippine Airlines (PAL) will start its domestic and international flights at Clark International Airport starting next month in compliance with President Duterte’s directive to transfer flights from the Ninoy Aquino International Airport (NAIA) in Metro Manila.

After the long-awaited implementing rules and regulations (IRR) of Republic Act 9353, or the Tourism Act of 2009, was finally issued, the Department of Tourism (DOT) expects hundreds of billions in investments in the tourism industry in the next five years.

Cebu Factsheet December 2016

NO CLASSES, HOLIDAY BUT CEBU TRAFFIC STILL HEAVY. Despite the holiday season when classes are closed, many roads in Cebu are still congested. LTO 7 Director Aleta Pulga said that the extended paying schemes offered by car companies are one of the reasons for the increase in volume of newly registered cars. Business leaders in Cebu are giving suggestions for possible solutions to decongest the roads as traffic leads to losses, including those that are not quantifiable such as stress, even if the increase in vehicles sold every year indicates positive economic growth. Building more road infrastructure support, regulating the purchase of cars, and setting up of eco-zones and townships outside of the Metro Cebu area were among those suggested.

CEBU MSMEs URGED TO GO INTO E-COMMERCE. The Department of Trade and Industry (DTI) Cebu Province is pushing for micro, small and medium enterprises(MSMEs) to go into e-commerce to compete with other Asian countries. Ma. Elena Arbon, DTI Cebu provincial director, emphasized that business in the Philippines are lagging behind other Asian counterparts in terms of innovation it’s high time for the business sector, especially the MSMEs, to advance themselves to provide better value for money and provide customer satisfaction. E-commerce related services are provided in DTI Negosyo Centers hoping to develop more high-end, high-value MSMEs that use creativity, knowledge, talent and skills for competitiveness. In November, DTI Cebu launched an e-commerce and digital marketing workshop participated by 14 MSMEs coming from different sectors. DTI will launch 16 more Negosyo Centers in the whole province of Cebu in 2017, bringing the total number to 27 by year-end.

LOCAL MUSIC APP FOR CEBU. An online streaming app for Cebu homegrown music will soon be available for download by February 2017 as a way to support the local music industry.  A Cebu-based Vietnamese software development company, in partnership with local music advocates, plans to invest at least P1 million for this app. This would further boost the Cebuano music industry, which is gaining popularity. It is also expected to be a platform for Cebuano musicians to showcase their talents.  FPT Software Philippines, which is a branch of Vietnam’s biggest IT conglomerate based in Hanoi, is partnering with Cebu’s Kadasig and 22 Tango Records. The company branched out to Cebu in early 2015 and has clients here and overseas in various industries such as IT applications, product engineering, commerce, communication, media and entertainment, and non-government organizations.

SEAWEED GROUP WANTS BAN ON BROWN ALGAE LIFTED. Seaweed exporters from Cebu expressed that they can earn from brown algae if the government will lift its total ban on activities related to the algae. The group requests regulation of the seaweed’s harvesting and lift  the total ban. Maximo Ricorhermoso, chairman of the Philippine Seaweed Industry Association (PSIA), explained that lifting the ban would also benefit local fisherfolks who also make money from harvesting the brown algae. He further said that restriction on Sargassum sea plants or samo have resulted to big loss of income not only among exporters but also among fisherfolks while the rotting seaweed makes the beach resorts very dirty. Ricohermoso also said that the Philippines has been harvesting an average of 100,000 metric tons of guso and this figure would have increased by 30 percent per year had the ban on Sargassum not been imposed. The seaweed group is waiting for the response of the Department of Agriculture (DA) for their request to consider banning all activities related to the seaweed only for a certain period.

CHINESE INVESTORS EYE CEBU. With the warming of relations between China the Philippines, Chinese investors continue to explore the possibility of have big ticket projects in Cebu. An established and well-known railway company in Beijing is the latest to visit Cebu, specifically Mandaue City, to express their intentions to invest in a mass transport and infrastructure in the city through a Private Public Partnership (PPP) project for a Metro Railway Transport system or an Auto Guideway Transit system. This would hopefully solve the city’s worsening traffic problem. CRCC is the third group of Chinese investors exploring for big projects in Cebu. The first to visit were representatives from Third Harbor Engineering Ltd and discussed investment prospects in Cebu with Governor Davide. The company was particularly interested in the Tans-axial Highway project. Chinese billionaire and philanthropist Huang Rulun and representatives of his company Century Golden Resources Group also met with Cebu City officials to take a look at investment prospects in the city.

LOCAL FIRM TO OFFER FRANCHISABLE BPO VENTURES. A Cordova-based BPO company will be offering franchisable BPO businesses soon, which is a welcome development for local players to get into the outsourcing business. Michael Cubos, the 32-year-old founder of Performance 360 Global Services in Cordova, Cebu, is piloting a franchising system that will provide opportunity for local investors to be part of the industry. Cubos also established Performance 360 Solutions in Davao. Cubos and a partner piloted a 15-man call center that now operates in Cebu IT Park. IT support, technology platform and business development are being provided by his company based in Cordova. The young entrepreneur joined the outsourcing business in 2012 with an initial investment of P10,000 when he set up a 10-seater contact center in Consolacion in northern Cebu. He said he will launch and offer the franchising business by the last quarter of 2017.

NEGROS ORIENTAL, SIQUIJOR – NEXT TOURISM DESTINATION. The Department of Tourism Central Visayas (DOT 7) announced that Negros Oriental and Siquijor can expect a boost in tourist arrivals. This was the announcement of Director Catalino Chan III who just recently assumed the post. He emphasized that these provinces are the focus destinations during his tenure and that he would need more aggressive promotion and cooperation of the local government units. Travel and tour exhibits may be conducted by DOT to promote these destinations to the domestic market. Tourism growth in the more established provinces of Cebu and Bohol will be sustained and enhanced. DOT 7 reported a total of 3.16 million tourists in Central Visayas for the first seven months of the year. Cebu comprised the bulk of tourism arrivals at 2.3 million, followed by Bohol at 402,246. Negros came next at 402,405 and Siquijor is at 54,788.

CEBU-BOHOL BRIDGE TO SPIKE TOURISM, ECONOMIC GROWTH. The Cebu business community welcomes the planned Cebu-Bohol Friendship Bridge as it will boost tourism and economic growth in both island provinces. The proposed 22-kilometer bridge will link Getafe town in Bohol to Cordova in Mactan Island. DTI Cebu provincial director Ma. Elena Arbon said this development will improve the flow of goods, people and tourists between the two provinces especially in situations when sea travel between Cebu and Bohol becomes difficult due to weather disturbances. National Economic and Development Authority Central Visayas (NEDA 7) director Efren Carreon explained the project doesn’t have a time frame yet; a feasibility study is still needed. He said further that a proposal for the study also has yet to be awarded to a team of consultants. The study, once completed, will have to outline the timeline and will have to be approved by the government through the NEDA board. Only then will the government be able to bid out the project implementation.

CEBU MARKETS ITSELF APART FROM THE COUNTRY. The impact of foreign governments issuing travel advisories to the Philippines is less felt in Cebu as it markets itself as a destination apart from the country. At the early turn of the millennium, Cebu already marketed itself as “an island in the Pacific” to attract visitors to directly fly to Mactan-Cebu International Airport. Ryan Uy, Philippine Airlines vice president for sales, said that as Cebu promotes itself as a “Republic of Cebu”, it is not affected by travel advisories to the Philippines issued by foreign governments that serve as roadblock to opening the region to more tourists. Early in November, there were unconfirmed reports of terrorism threats and kidnapping in southern Cebu and the US government issued travel advisory to its citizens not to travel to the area. Business in tourism destinations in Cebu, however, went on as usual. At present, PAL offers direct flights from Cebu to Los Angeles, Tokyo, Nagoya, Osaka and Incheon and just recently launched the Cebu-Singapore route. It also opened two new direct domestic flights: Cebu-Caticlan, and Cebu-Clark.

Davao Factsheet December 2016

TAGUM CITY SETS INVESTMENT CONFERENCE THIS JANUARY. The latest trends in Digital Economy, Designs and Doing Business (dubbed as 3D’s) will be highlighted in an Investment Conference this January 11.  Together with DTI Davao Region, the City Government of Tagum and various stakeholders, this conference aims to reinforce Tagum as an investment hub for 2017.  According to Tagum City Mayor Allan Rellon, the previous investment forums have resulted in attracting mall operators such as Double Dragon Properties Corp. and real estate company Megaworld  in investing and creating jobs in the Mindanao island-region.

IMPROVEMENTS COMING TO DAVAO INTERNATIONAL AIRPORT. In an effort by the Department of Tourism to increase the tourist by 15 percent from 10-12% increase on 2017, the City Tourism officials and Civil Aviation Authority of the Philippines (Caap) officials have streamlined necessary improvements including repainting, rest room enhancements, installing air conditioning units, and replacing brand posters with TV for a polished and technologically edgy presentation.  The regional DOT will concentrate in promoting the region to South East Asian (SEA) nations and countries with possible direct flights to Davao such as Hong Kong, South Korea and Japan.

DAVAO EMPLOYMENT SHOWS POSITIVE GROWTH. Data provided by Philippine Statistics Authority shows that employment rates in the Davao region for the month of October 2015 and for the same period in 2016, showed an increase from 94.5 percent to 96.4 percent.  The Department of Labor and Employment (Dole) Assistant Regional Director Jason Balais attributed the increase to the Labor Day and Independence Day job fairs launched in 2016.

P7 BILLION BUDGET FOR DAVAO CITY. The city’s annual budget was passed last December 2016 and pegged at P7 Billion.  Davao City Council also called attention to the 10 percent tax adjustments for 2017, citing that the last time the city had an increase in taxes was 9 years ago.  The bulk of the budget will be from the allotted internal revenue (60%) and the rest will be taken from the local taxes, with an approved certification from Mayor Sara Duterte-Carpio to collect an additional P100 million as supplemental budget.

MULTI-MILLION AQUA FEED MILL INAUGURATED IN BUNAWAN. A partnership between Davao South Feedmill Plant (DSFP) and agribusiness pioneer VITARICH Corporation launched a multi-million aqua feed mill with a capacity of 4 tons per hour in Bunawan, Davao City.  The investment took advantage of the burgeoning demand for aqua feeds in Mindanao, which used to get their feeds from Iloilo via shipping.  As the push for local products grow, the wanting supply for this market in the country should also increase as expressed by National Feed Sales Manager Guillermo Miralles.

DAVAO EXCEEDS JOB GENERATION, DOMESTIC SALES TARGETS. In a Preliminary Annual Performance report by DTI-Davao regional director Maria Belenda Ambi, the job generation target of 32,000 exceeded with its 33,718 (105%) jobs generated in the January – November 2016 report.   The domestic sales raked in P1.3 million from the target of P1.2 million (over 111% higher).  MSMEs assistance also reached a 105% high with 9,835 assisted (target was set at 9,500).  DTI records 14,975 business registrations and 145 Shared Service Facilities provided.  The DTI in partnership with Philippine Center for Entrepreneurship, Inc. – Go Negosyo targets at developing MSMEs to reduce unemployment and poverty

DTI P3 FOR MICRO ENTREPRENEURS LAUNCHED. In its aim at neutralizing the “5-6” lending schemes a microfinancing program, “Pondo Para Sa Pagbabago at Pag-Asenso” or P3 is set to benefit micro entrepreneurs in 2017. The Department of Trade and Industry (DTI) is set to pour an initial P1billion as part of its P19 billion financing program under Duterte administration.  DTI-Davao regional director Maria Belenda Ambi said that the budget will be coursed through the sole financial institution of DTI, Small Business Corp. (SBC).  The DTI-Davao goal for 2017 is to assist a total of 10,500 MSMEs.  A series of campaigns for P3 will be conducted starting January 2017.

NINE PERCENT POWER HIKE FOR DAVAO. Due to the booming investments in Davao, Davao Light and Power Company (DLPC) outgoing executive vice president Arturo Milan sees an increase in demand from 371megawatts (MW) to 405MW.  DLPC is eyeing San Miguel Consolidated Power Corp. (SMPC) General Santos power plant for a 60MW power contract.  The DLPC is set to augment their power supply with the Bajada power plant and with the implementation of the Interruptible Load Program (ILP).

DURIAN DECREASE BY 40%, DEMAND UP FOR 2017. Due to the El Niño, Durian Industry Council of Davao City noted over 100 tons of reduction in Durian production.  The scorching conditions killed a lot of the trees and with Bukidnon and Cotabato plantations not yet producing in quantity, the Durian harvest suffered.  However, for 2017, the demand for frozen Durian has gone up with China orders up to a hundred 40-feet container vans.  With Davao del Norte plantations still in its recovery phase from the 2012 Typhoon Pablo, the industry is scrambling to meet demands

DEMAND FOR YELLOW CORN SET TO INCREASE. In relation to the newly opened Vitarich Corporation aqua feed mill in Bunawan, Davao City and the incoming livestock investments in the region, the production and demand for yellow corn is set to rise.  This would give yellow corn planters a market advantage.  The contract is yet to be finalized and a meeting with Davao City Mayor Sarah Duterte-Carpio is to be set for the Department of Agriculture-Davao Region to purchase 50% of the dry yellow corn from micro farmers at P14 per kilo to supply Vitarich Corporation’s new plant.  The other 50% that the farmers produce can be sold freely to any buyer they choose.