Philippine Weekly Update - for the week ending 16 July 2011
In-Focus - July 20, 2011

Economic

The BIR pushed back the issuance of the revenue regulation that would pave the way for the implementation of the Personal Equity Retirement Account (PERA).

The DTI is seeking a P100 million budget for its One Town, One Product program, to enable it to better support micro-entrepreneurs nationwide.

The government is already weighing its options regarding the changes to its excise tax regime after reports the Philippines lost the excise tax dispute on spirits / liquor at the WTO. Several bills have already been filed proposing to increase taxes on domestic products. The DOF has always supported a simple, specific form of excise tax.

The yield of the 91-day T-bills eased by  37.9 basis points to an average 2.501% in this week’s auction.

Domestic liquidity grew 8% in May from 7.3% in April.

Merchandise exports fell 3.2% to US$ 4.104 billion in May compared to May 2010, with the electronics sector showing a decline of 26.2% to US$ 1.886 billion. For the 5-month period, exports grew by 7.51% to US$ 20.625 billion.

This year’s list of investment areas where businesses will be eligible for tax perks will come into effect within the month, after Malacanang finally published it. The IRR should be available within short as the 2011 IPP is scheduled to take effect on July 27.

The 140-MW Naga power plant complex, one of the last power assets to be privatized, will be bid out in October, PSALM announced.

Foreign direct investments dropped 15.1% in the first four months of the year to US$ 552 million according to the BSP.

The World Bank has renewed its call for more transparency in the PPP bidding process as well as the manner in which PPP projects are selected and the studies are applied by government. Hofman added that a higher degree of competition in various sectors, particularly in utilities, is key to increasing the amount of investments infused by local and foreign investors.

Remittances by OFWs picked up in May expanding 6.9% to US$ 1.688 billion. In the first 5 months, remittances reached US$ 7.898 billion, up 6.2% from the same period of last year.

The inflow of foreign portfolio investments more than tripled in the first half of the year to US$ 2.36 billion, compared to US$ 686.6 million last year.

The President approved the Philippine Export Development Plan 2011-2013 that includes strategies on product development, marketing, and promotions to improve key export sectors.


Business

Convergys Corp. will hire 5,000 more employees this year, which will bring the number of employees to 30,000.

MacroAsia Corp. an aviation support company controlled by Lucio Tan, is breaking into the water distribution business with a planned treatment plant and distribution facility in Cavite, costing an initial investment of P2.5 billion.

PLDT has filed a motion with the Supreme Court for the reconsideration of a recent ruling on the determination of the degree of foreign ownership in public utilities, a legal issue that has remained unresolved for the last 75 years, and ordering the SEC to determine whether or not PLDT complied with the constitutional limit on foreign equity.


Investments

PNOC-Exploration Corp. will spend more than P100 million this year to support its retail compressed natural gas (CNG) business.

Maynilad Water Services Inc. will spend P1.6 billion to build 11 sewage treatment plants this year.


Infrastructure

DMCI Power Corp., the power generation unit of the Consunji group, is contemplating the development of a 1,200-MW power complex in Calaca, Batangas, in addition to the existing 600-MW power plant. They will focus initially on adding two 150-MW power plants in the next 32 to 36 months, allowing the use of low-grade coal from Semirara.

Team Energy Philippines Corp., the local joint venture between Marubeni Corp. and Tokyo Electric Power Co., plans to set up roughly 50-MW of renewable energy projects for US$ 150 million starting next year.