PEZA investment pledges drop by 22%; 2nd tax package blamed


PEZA investment pledges drop by 22%; 2nd tax package blamed

By Roy Stephen C. Canivel
Philippine Daily Inquirer / 03:57 PM April 6, 2018

The Philippine Economic Zone Authority (Peza) blamed the drop in investment pledges for the first two months of the year to the second comprehensive tax package, which is being pushed despite some investor concerns.

The 22-percent decline should not be a surprise to the national government, noting that the government “knows” what Peza-registered companies have been complaining about, Peza Director General Charito Plaza pointed out.

This came amid a report of the latest Peza performance, showing that investment commitments for January and February fell 21.7 percent to P20.99 billion compared to P26.81 billion in the first two months of 2017.

While Peza did not provide the latest figures for the month of February alone, the numbers suggest that the month dragged down the growth seen at the start of the year.


“Government knows why [pledges dropped] because business chambers, foreign embassies, and industry locators sent their petitions to DOF [Department of Finance] and Congress about their opposition of TRAIN 2,” she said, referring to the second tax package.

The second tax package has just been filed in Congress under House Bill No.7458. The bill is similar to the proposal raised by the Department of Finance earlier this year.

The bill would gradually lower the corporate income tax, which ranks among the highest in the region, while rationalizing tax incentives.

This uncertainty causes woes on the part of Peza, especially since it is this investment promotion agency that has been mainly using these incentives to attract more investors.

“It’s not about Peza performance. All industries are fighting for retention of Peza incentives, which we are also fighting for,” she said in a mix of English and Filipino.

Earlier this year, Plaza said her agency would be offering a counter-proposal in response to the second package. Instead of reducing the current menu of incentives, she intends to improve it by increasing the list.

However, she has not yet disclosed the finer details of this counter-proposal.

Sta. Lucia raises funds via notes facility

By Amy R. Remo
Philippine Daily Inquirer / 02:35 AM April 7, 2018

Publicly listed Sta. Lucia Land Inc. (SLI) said it signed a P5-billion notes facility with several banks to help fund its projects.

Part of the proceeds will also be used to pay existing debts, said SLI in a disclosure to the Philippine Stock Exchange last month.

According to SLI, China Bank Capital Corp. was the sole arranger and bookrunner while Development Bank of the Philippines (DBP) acted as co-manager. China Bank Savings Inc., China Banking Corp., DBP, and Maybank Philippines Inc. meanwhile are note holders.

This latest fundraising was said to form part of the company’s plans to partially finance an up to P15-billion, three-year capital expenditure program.

In January, SLI disclosed that it was authorized to avail of a seven-year corporate note facility with financial institutions, for an aggregate amount of P3 billion and with an overallotment option of P2 billion. It also announced that it would enter into joint ventures to develop projects spanning some 1.4 million sqm spread in different sites.

IMI ranks 18th largest EMS company in the world

By Doris Dumlao-Abadilla
Philippine Daily Inquirer / 05:08 AM April 9, 2018

Ayala-led Integrated Micro-Electronics Inc. (IMI) is now the world’s 18th largest electronics manufacturing services (EMS) based on global revenue which exceeded $1 billion last year, improving its global ranking by two notches from the previous year.

Laguna-based IMI is also the only Philippine-based firm on the top 50 list of EMS companies in the world for 2017 culled by Manufacturing Market Insider, the first and only publication dedicated to contract manufacturing of electronics.

The company recorded $1.1 billion in global revenue in 2017, marking a 29-percent year-on-year growth.

It has moved up from its previous rank of 20th on the list for 2016, when its global EMS revenue hit $843 million.

EMS refers to companies that design, assemble, produce and test electronic components for original equipment manufacturers (OEMs). It is a contract manufacturer in the electronics industry but apart from making products for OEMs, an EMS firm typically provides other value-added services.

IMI specializes in electronics for long product life cycle segments such as automotive and industrial electronics.

DoubleDragon’s Citymall inks deal with SM unit

By Doris Dumlao-Abadilla
Philippine Daily Inquirer / 05:20 AM April 7, 2018

The shopping mall arm of property developer DoubleDragon Properties Corp. has signed 10-year contracts amounting to P4.97 billion for 22 SM Savemore supermarkets that will be set up in each of its additional community malls that will open this year.

The new lease contracts signed by DoubleDragon subsidiary CityMall Commercial Centers Inc. cover only the supermarket lease for the 22 additional CityMall sites that are expected to open within the year, DD said in a statement.

Just from supermarket tenants alone, the 100 CityMalls in the pipeline through 2020 are expected to generate at least P20 billion in rental income in the first 10 years of operations.

“The signing of another 22 SM Savemore Supermarkets to locate in our soon-to-open CityMalls, is a testament to the value of what CityMall is providing to modern retail brands and the relevance of the platform we provide in their expansion into the next frontier of retail,” said Hannah Yulo, chief investment officer of DoubleDragon.

As of end-2017, DoubleDragon has completed 332,500 square meters of leasable space, which is expected to expand to 600,000 sqm by this yearend.

As of the first quarter of 2018, the first 28 operational malls in the portfolio are about 95 percent leased out.

“We now have 28 operational malls, plus the 22 more malls slated for completion this year, we are in line with our goal of having 50 completed malls by the end of this year,” said DoubleDragon chair Edgar Sia II.

DoubleDragon sees two key developments making CityMall’s community malls more relevant to provincial areas: the organic shift from traditional retail to modern retail in third-tier cities and the noticeable penetration of e-commerce in the tier 1 urban areas of the country. These are seen to make expansion into CityMalls more and more critical to modern retail tenants seeking to hedge exposure against the disruptive rise of e-commerce.

DoubleDragon expects the inflection point of these transitions to be felt within the next three years, just in time for the completion of the company’s goal of having a strong network of 100 CityMalls in the provinces.

To date, Sia said CityMall had started to gain significant traction in the countryside.

“For the past three years, DoubleDragon has planted the seeds and necessary groundwork that will enable the company to play a major role in this retail transformation as we continue to expand in what will essentially be the most important market one day as e-commerce continues to disrupt the urban market,” Sia said.

“The business model of CityMall is positioned to remain relevant beyond the age of digitalization because we focus on delivering only basic necessities, and generally, the supermarket, cinema, services and food tenants combined occupy more than 70 percent of a typical CityMall. CityMalls are also conveniently located in provincial city centers within close reach of its market,” he added.

PBSP says Mindanao LGUs need to shape up to draw investors

By Carmelito Q. Francisco
BusinessWorld / 09:02 PM April 8, 2018

DAVAO CITY — The Philippine Business for Social Progress (PBSP), a corporate-led non-profit foundation, has urged local leaders in Mindanao to improve governance standards and take initiatives that will strengthen their direct participation in development and investment projects.

PBSP Chair Miguel Rene A. Dominguez, a former governor of Sarangani province, said local governments — provincial, city, and municipal levels — need to show potential investors that their respective areas are ready to host business ventures.

“They (LGUs) need to be able to institute reforms and other policy initiatives geared toward the building of confidence among investors,” said Mr. Dominguez at the sidelines of last Friday’s launching of the Mindanao Jobs Report (MJR) here.

He pointed out that although Mindanao has vast growth areas for agriculture, farmers have remained poor because they cannot increase productivity and need capital support for better technology and market links.

LGUs, Mr. Dominguez said, can create an attractive investment landscape and help farmers convince investors that they can grow their capital in their localities.

The PBSP, in partnership with the Mindanao Development Authority, launched in 2014 an inclusive development program to encourage investors to consider possibilities in Mindanao, especially in areas outside the established urban and growth zones.

Meanwhile, the World Bank and the Philippine government are crafting a new program, similar to the Mindanao Rural Development Program (MRDP), that will serve as another mechanism for bringing growth in the rural areas.

Mara K. Warwick, World Bank country director for the Philippines, Brunei, Malaysia, and Thailand, said the proposed program is “still in the initial stages” with ongoing discussions with the Department of Agriculture (DA).

The DA was the lead agency in the implementation of the MRDP, which has now been upscaled into the Philippine Rural Development Project (PRDP).

Ms. Warwick said while similar to the MRDP, “there will always be differences” for the new one, which would be largely based on the Mindanao Jobs Report.

The study recommends a focus on increasing agricultural productivity and boosting human capital.

The MRDP was aimed at addressing poverty in the rural areas of Mindanao by putting in place key infrastructure interventions like farm-to-market roads and irrigation systems, enterprise components and environmental preservation initiatives.

Under the program, LGUs needed to apply for funding for their projects as well as provide a minimal financial counterpart for implementation.

Provincial gov’t to build up northern Iloilo tourism

By Louine Hope U. Conserva
BusinessWorld / 09:04 PM April 8, 2018

THE ILOILO provincial government is planning to create a Northern Iloilo Tourism Authority (NITA) to take the lead in developing the islands in the province’s 5th district into tourism sites.

“We want to prepare the whole northern Iloilo, especially Concepcion, which has 17 islands while the town of Carles, which has 22 or I think 24, to be real tourist destinations,” said Gov. Arthur D. Defensor Sr.

Among the existing tourist destinations in northern Iloilo are Gigantes Island, Sicogon Island, Cabugao Gamay Island, and Pawikan Cave in Carles town; Marbuena Island Resort in Ajuy; Agho Island, Pan de Azucar, and Sandbar Island Beach Resort in Concepcion. However, Mr. Defensor said these sites still lack accommodation facilities. “We are looking at where to place the hotels and facilities — in the mainland or in the islands. Because what some tourists do is to go there for island hopping then go home in the evening,” he said.

The governor said they are now looking at the legislative process for creating the NITA. Mr. Defensor will meet with the northern Iloilo municipal mayors to discuss the plans after the scheduled League of Municipalities of the Philippines-Iloilo assembly on April 10-13.

In a previous interview, Provincial Tourism Office head Gilbert Marin said the 5th District was the top tourism destination in Iloilo province in 2017, accounting for 40% of the total 310,878 tourist arrivals.

Negros Oriental bans permits for coal power plants

By Victor V. Saulon
BusinessWorld / 09:25 PM April 8, 2018

THE provincial board of Negros Oriental has issued a resolution banning the use of coal as a source of energy throughout the province, adding to the number of local governments that have decided to eradicate the use of the fossil fuel.

In an order dated March 28, Governor Roel R. Degamo signed a policy that all offices and local government instrumentalities in the province “shall not issue any permit, authorization, endorsement, or any expression of support to the development of coal-fired power plants.”

His declaration that Negros Oriental is an “environment-friendly and clean energy province” follows similar issuances by other local governments such as Guimaras, Sorsogon and Ilocos Norte.

Along with the order, the province has opted to use clean and renewable energy in its 19 municipalities and six cities to support economic growth and do away with activities harmful to the environment.

It said as a step forward, the province will stop using coal as an energy source because of its impact on the environment, including high carbon emissions on health and global climate.

The new provincial executive order supports the government’s goal of meeting its commitments in line with the Instrument of Accession to the Paris Agreement on Climate Change, which was signed by the President.

The agreement identifies the critical impact of global warming and the need to address this issue through programs that aim to cut carbon emission.

Based on data from the Department of Energy, the province hosts two geothermal power plants — the 49.4 megawatt (MW) facility in Nasulo and the 192.5 MW Palinpinon plant in Valencia. They are respectively run by Energy Development Corp. and its unit Green Core Geothermal, Inc.

Three upcoming projects in the province will all be using hydroelectric power. These are three separate facilities in Amian under Natural Power Sources Integration, Inc. with a capacities of 3.2 MW, 0.8 MW and 1.5 MW. The target testing and commissioning date of the first two is in December 2020, with the last one in December 2025.

Four separate projects using solar, hydropower, wind and battery storage technologies are in the “indicative” stage, or the project phase where the proponents are in the process of securing permits or negotiating project financing.

Gov’t targets 2018 OK for all major projects

BusinessWorld / 12:31 AM April 9, 2018

THE CURRENT ADMINISTRATION hopes to get the green light for all its flagship infrastructure projects by yearend — as it approaches the midpoint of its six-year term in 2019, a chief economic manager said on Sunday.

“Of the 75 high-impact and big-ticket projects we have identified, 23 projects have completed the approval process and are now shovel-ready. We expect the rest of the projects to pass the approval process this year,” Finance Secretary Carlos G. Dominguez III — who is part of the National Economic and Development Authority Board that gives the final approval for major projects — said in a speech at the April 5 World Bank-Singapore Infrastructure Finance Summit that was attended by Southeast Asian finance ministers and investors.

A statement on Sunday of the Finance department had lifted excerpts from the speech.

The administration plans to hike infrastructure spending to 7.3% of gross domestic product by 2022, when President Rodrigo R. Duterte ends his six-year term, from 5.4% in 2017 in a bid to prod GDP growth to 7-8% annually until 2022 from 2017’s 6.7% and a 6.3% average in 2010-2016. — EJCT

Boracay eyes waste-to-energy facilities amid excess garbage

By Victor V. Saulon
BusinessWorld / 09:22 PM April 8, 2018

BORACAY authorities are considering a waste-to-energy facility as a long-term solution to the tourist destination’s garbage problem which has contributed to state agencies recommending its closure starting April 26.

“It is going to be entered into by the local government and the private sector,” said Jonas R. Leones, undersecretary of the Department of Environment and Natural Resources, on the sidelines of briefing to announce the agency’s rehabilitation plans during the island’s closure to tourists.

“We were informed that the local government has already talked to someone. They already have a potential partnership,” he said.

He said the capacity of the proposed power plant will depend on the waste being generated by the island, which he estimated at around 90 to 115 tons per day.

He said the island is able to haul out only about 30 to 40 tons daily, leaving a mounting garbage problem that could potentially render the island’s waters unsafe for residents and tourists.

There is a corresponding number of megawatts that can be generated from the excess waste, he said.

Should the project materialize, Boracay will add to the growing number of local governments that are opting to adopt waste-to-energy as a solution to their garbage problem.

For instance, Davao City is planning to build a waste-to-energy facility that can produce around 12 megawatts (MW) of electricity once completed in the next four years. The project is planned to accommodate 600 tons of waste per day. Cebu City and Clark, Pampanga are reportedly also considering similar technologies.

Davao City is looking at the first quarter of 2022 as the target completion date of the project, making it one of the early advocates of waste-to-energy technology. Its project will be partly funded in part by 5.013-billion yen in official development assistance from the Japanese government, and in part from possible private sector investors.

Boracay’s garbage problem prompted the DENR, Department of Tourism and Department of Interior and Local Government to recommend the island’s closure to visitors, a move affirmed by the President.

The rehabilitation of Boracay is set for six months, although the duration may be shortened depending on the progress of the revival efforts after what the DENR called “many years of unbridled expansion and the influx of mass tourism.”

DSWD, DoLE gear up for assistance to Boracay workers

By Louine Hope U. Conserva
BusinessWorld / 09:05 PM April 8, 2018

THE Department of Social Welfare and Development (DSWD), as chair of the National Disaster Risk Reduction and Management Council, has called for an inter-agency social response for workers and families who will be affected by the temporary closure of the popular tourist destination Boracay.

“We know that the closure will have significant negative effects on households and employment. We will work as best as we can to mitigate these effects by engaging in convergence efforts with other government agencies,” DSWD Officer in Charge Emmanuel A. Leyco said in a statement released Friday.

The government has announced that Boracay, which has been plagued by environmental abuse, will be closed for six months starting April 26. Mr. Leyco said he already had preliminary discussions with the respective heads of the Department of Environment and Natural Resources (DENR) as well as the Department of Labor and Employment (DoLE) for synchronized response efforts.

The DSWD is set to activate two operations centers in Aklan on April 26, one in Boracay and one in the mainland in front of the Malay municipal hall, to facilitate the release of assistance and emergency welfare services. Meanwhile, the DoLE-Western Visayas office said affected workers can avail of a one-month emergency employment from the agency while other assistance programs are also being prepared. DoLE said more than 17,000 workers are expected to be displaced by the island closure.

Duterte mulls turning Boracay into ‘land reform area’ for farmers

By Arjay L. Balinbin
BusinessWorld / 06:13 PM April 9, 2018

President Rodrigo R. Duterte announced on Monday, April 9, that the controversial Boracay island may be subject to land reform coverage.

The President made his remarks a few days after he approved the six-month closure of the island beginning April 26.

“So maybe after that, I-land reform ko lahat yan (I will put it all under land reform program), then I’ll give it to the farmers. I’ll give them the tractors,” Mr. Duterte said in his speech at the Davao International Airport in Davao City prior to his departure for China and Hong Kong.

As for the business sector, the President said: “How about the business? Well, I’m sorry but that is the law. The law says it is forestal, agricultural. Why would I deviate from that? Do I have a good reason to do so?

Former President Gloria M. Arroyo signed the Proclamation No. 1064 that “classifies Boracay Island situated in the Municipality of Malay, Province of Aklan as Forestland (for Protection purposes) and Agricultural Land (Alienable and Disposable) in accordance with the provisions of Commonwealth Act 141, otherwise known as the Public Land Act and Section 13 of Presidential Decree No. 705 otherwise known as Forestry Reform Code of the Philippines, subject to actual ground survey and delineation.”

Mr. Duterte stressed that the island is going to be a land reform area for Filipinos. “If they want to build something there, they can.”

The President also denied speculations that there is a planned construction of a giant casino on the island.

“I never said about building anything or even a nipa hut there. What I said is that the island itself is owned by the government. I’ve said before that it is agricultural and forestal. Unless there is a law or a proclamation of the President setting aside anything there, an inch of land, maybe, then that would be all right for all those people to go in,” he explained.

Ejercito to propose review of Banaue Rice Terraces

By Camille A. Aguinaldo
BusinessWorld / 09:07 PM April 9, 2018

SENATOR Joseph Victor G. Ejercito plans to file a resolution looking into the “deteriorating” state of another tourist destination, the Banaue Rice Terraces in Ifugao province.

“Like Boracay, we need drastic measures to save it,” he said in a mobile message to reporters on Monday. Mr. Ejercito’s plans was prompted by his visit over the weekend in the Cordillera region, where he observed that the Banaue Rice Terraces, a UNESCO Heritage Site, is under threat from residential structures.

He added that the “younger generation” in the area have lost interest in farming and there may no longer be cultivators in the future. Mr. Ejercito will discuss his proposal with Senator Nancy S. Binay, chair of the committee on tourism.

APFC aims to have 30 FastCats by 2020

By Charmaine A. Tadalan
BusinessWorld / 12:03 AM April 6, 2018

FASTCAT operator Archipelago Philippine Ferries Corp. (APFC) is aiming have 30 vessels in its fleet by 2020.

“To complete our fleeting of 30 ships by 2020, we need 18 ships,” APFC President and Chief Executive Officer Christopher S. Pastrana told reporters in a briefing on Thursday.

At present, FastCat currently operates 12 ferries.

On Thursday, APFC signed a P1.726-billion, 12-year loan agreement