Philippine WeeklyPhilippine Update

WEEKLY UPDATE WE TELL IT LIKE IT IS

VOLUME VI, NO. 19 May 18 - 22, 2015 ______PHIL. Copyright 2002

_ THE WALLACE BUSINESS FORUM, INC. accepts no liability for the accuracy of the data or for the editorial views contained in this report.__ Political "Quotes VP Binay willing to answer AMLC allegations in court of the Week" The camp of Vice President Jejomar Binay is willing to appear in court and face allegations stemming from the Anti-Money Laundering Council's (AMLC) report. The AMLC earlier published a report listing 242 bank accounts, investments and insurance policies under the “It’s not about politics. It’s about name of Vice Pres. Binay, his family and his friends. Vice Pres. Binay’s camp is set to oppose the application of the rules in the the freeze order of the Court of Appeals over his alleged anomalous bank accounts. His camp Senate.” also maintained that publishing the AMLC report was illegal and should not be used as an instrument for political harassment. According to them, the AMLC report is misleading since Presidential Spokesperson Vice Pres. Binay only owns 5 of the 242 listed bank accounts. Edwin Lacierda on the accusation made by the Vice President’s camp Binay slams LP for arrest of 14 aides that the administration was behind The Senate on Tuesday ordered the arrest and detention within 24 hours of 14 aides and the Senate’s arrest order. business associates of Vice President Jejomar Binay for snubbing hearings into corruption allegations against him. According to the camp of the Vice President, arrest orders are “Definitely, President Aquino’s “designed to bring the Vice President down to his knees” and are obvious attempts “to destroy personal decision on who to support [the administration’s] formidable rival in the 2016 [Presidential] elections.” Among those in 2016 will carry a lot of weight on ordered arrested were alleged Vice President Binay bagman Gerardo Limlingan and LP’s decision-making process but it businessman Antonio Tiu. Also ordered arrested were Mr. Tiu’s brother James and his wife is premature to be drawing Anne Lorraine Buencamino Tiu; Chong family members (Kimsfer, Erlinda, Irish, Kim, Imee conclusions at this time.” and Irene); Hirene Lopez, Aida Alcantara, Danilo Villas and Vissia Marie Aldon. Liberal Party stalwart and Iloilo Pres. Aquino’s net worth grows by P1.8Mn in 2014 representative Jerry Treñas on President Aquino’s wealth went up by P1.817 million in 2014, his latest statement of assets, President Benigno Aquino III’s bet liabilities and net worth (SALN) submitted to the Office of the Ombudsman showed. Since for the 2016 presidential elections. assuming office 5 years ago, records show that Pres. Aquino’s declared net worth has increased by more than P18.117 million. In his SALN as of June 30, 2010, Pres. Aquino "The grant of these financial declared assets of P50.194 million including real properties worth P33.755 million and incentives and benefits will attract, personal properties valued at P18.868 million. Six months later, he declared a net worth of recruit and retain rural physicians P54.999 million and after his 1st 18 months in office, his wealth went up to P65.130 million. In across the country and make 2012, President Aquino’s wealth slightly went down to P65.128 million, only to go up again in serving as a healthcare professional 2013 to P66.494 million. His latest SALN covering the year 2014 shows bigger real property in the areas attractive and holdings at P32.669 million, the increase largely explained by his inheriting a residential motivating." property in Antipolo worth P507.393 million. Rep. Rolando Andaya Jr. pushing DND says P1.2 Bn helicopter bidding aboveboard for a bill granting additional According to officials of the Department of National Defense (DND), the bidding for the incentives and benefits to rural acquisition of 21 refurbished combat helicopters worth P1.2 billion was aboveboard. The DND doctors. accepted only 7 helicopters after Secretary Voltaire Gazmin terminated the contract and blacklisted the supplier, Defense Undersecretaries Pio Lorenzo Batino and Fernando Manalo, Assistant Secretary Patrick Velez told the Senate Blue Ribbon committee. Mr. Manalo, undersecretary for finance, munitions, installations and materials, said he has documents to prove that Bureau of Internal Revenue (BIR) employee Rhodora Alvarez had a personal motive in her “exposé” against DND officials. Ms. Alvarez had testified at the Senate that she DISCLAIMER was privy to the deal between Air Force officials and RASI and its local counterpart, Eagle The articles in this Philippine Weekly Update Copters Inc. (PWU) have been culled from various media sources. We cannot, therefore, vouch for the accuracy of what is reported.

The Wallace Business Forum, Inc. 1 May 18 - 22, 2015 Philippine Weekly Update

Germany to fund climate training hub FINANCIAL INDICATORS Latest Week Week-ago Year-ago The Philippines has been identified as the site of a climate training center that will be constructed using a grant of €3 million from the T-Bill Rates (May 18, 2015 average) German government. Secretary Lucille Sering, vice chairman of the 91-day N.T. N.T. N.T. Climate Change Commission (CCC) said, “We were able to push for 182-day N.T. N.T. N.T. a proposal and submit it to the government of Germany, through the 364-day N.T. N.T. N.T. Ministry of Environment, and we got a positive result.” She also mentioned the establishment of the South-South Center of Excellence for Climate Information and Services, which would PESO DEPOSIT RATES (% p.a., May 04 - 08, 2015) benefit members of the Climate Vulnerable Forum (CVF) – a group Savings Deposit 0.00 0.00 0.00 of 20 small developing countries that were identified as the most Time Deposit vulnerable to the impacts of climate change. The Philippines was Below 1 year 1.51 1.51 0.93 chosen as president of CVF during the climate change conference 1 - 2 years 3.46 2.14 2.12 2.34 of parties in Peru in December 2014. Over 2 years 2.96 3.16 0.86

DOLLAR DEPOSIT RATES (% p.a., May 04 – 08, 2015)

Economy Savings Deposit 0.18 0.19 0.21 Time Deposit BOC raises collection goals 60 days & below 0.59 0.60 0.61 The Bureau of Customs (BOC) has adjusted its collection program 61-90 days 0.67 0.69 0.77 91-180 days 0.79 0.83 0.81 for the last 9 months of 2015 in a bid to make up for the 1Q’s below- 181 days & above 0.98 1.03 0.98 target haul. The bureau collected P92.24 billion from January to March, up 6.6% year on year from P86.5 billion. Last quarter’s haul, LIBOR/SIBOR (% p.a., May 18 – 19, 2015) however, fell P11.06 billion or 10.7% short of the P103.3-billion goal the government had set for those 3 months and the increment was Libor 90 days 0.29 0.26 0.23 Sibor 90 days 0.90 0.90 0.40 smaller than the 25.7% recorded in 2014’s comparable period. With Libor 180 days 0.41 0.41 0.32 the shortfall, the bureau has adjusted its collection program for the Sibor 180 days 0.98 0.98 0.48 next 3 quarters in a bid to still meet the year’s P436.59-billion goal. From April to June, it now aims to collect P106.87 billion, up from an FOREIGN EXCHANGE RATE (% p.a., May 22, 2015) earlier P105.03-billion target set under this year’s fiscal program. This consists of P16.33 billion in import duties, P81.63 billion in PDS Weighted Ave. (P/US$) 44.51 44.51 43.62 Blackmarket (P/US$) 44.60 44.68 43.70 value-added tax (VAT) and P8.91 billion in excise tax. For the 3Q, PDS Weighted Ave. (P/EURO) 49.46 50.87 59.69 the bureau is now programmed to collect P111.97 billion, up from P111.45 billion. The total consists of P17.11 million in import duties, PRIME LENDING RATE (% p.a., May 22, 2015) P85.52 billion in VAT and P9.34 billion in excise tax. Bank of America 6.05 5.66 5.44 BPI 5.50 5.50 4.90 PH economic growth to pick up this year Citibank 5.08 6.55 5.38 The Philippine Institute for Development Studies (PIDS) said the BDO 5.52 5.52 4.85 Philippine economy could grow at 6.8% this year, faster than the Hong Kong & Shanghai Bank 4.70 6.33 5.20 6.1% notched last year. However, PIDS Officer-in-Charge and Vice- ING Bank 4.90 5.10 3.75 Metrobank 6.25 6.25 7.00 President Adoracion Navarro said in her presentation during the PNB 7.90 7.90 8.40 think tank’s “The Philippine Business and Economic Outlook for RCBC 6.75 6.75 6.75 2015 and Beyond” forum that the 6.8% growth rate would still fall Security Bank 7.40 7.40 7.40 below the government’s target of 7-8%. For this year, she said Standard Chartered Bank 4.11 4.11 5.38 private consumption and government consumption will drive the UCPB 6.00 6.00 6.00 Union Bank 7.50 7.50 7.50 country’s economic growth, but several local and global risks could negatively affect the country’s growth prospects. In the same forum, L/C SELLING RATE-IMPORT (P/US$, May 22, 2015) Philippine Stock Exchange President and Chief Executive Officer Hans Sicat said prospects also bode well for the private sector in Bank of America 44.53 44.63 43.65 general and the country’s capital markets. Mr. Sicat said: “The next BPI 44.60 44.65 43.70 Citibank 44.41 44.43 43.55 24 months will be robust in terms of infrastructure build, consumer Equitable PCI Bank 44.65 44.65 43.85 spending, in terms of continued activity and liquidity in the financial Hong Kong & Shanghai Bank 44.87 44.92 44.23 market and the exchange.” ING Bank 44.57 44.62 43.61 Metrobank 44.60 44.65 43.68 PNB 44.75 44.75 43.85 Infrastructure upgrade needed to sustain economic RCBC 44.54 44.56 43.80 gains Standard Chartered Bank 44.65 44.65 43.85 Central bank Governor Amando Tetangco Jr. said Standard & Security Bank 44.53 44.54 43.61 Poor’s Ratings Services has recognized the economy’s gains, but UCPB 44.70 44.75 43.90 Union Bank 44.85 44.75 43.95 also stressed the need for improvements in infrastructure. He stated, “they recognized the continuing good economic performance and reforms that have been put in place that are supporting these *T-Bills transaction is every two weeks performances.” Moreover, “this kind of performance, I believe, is

The Wallace Business Forum, Inc. 2 May 18 - 22, 2015 Philippine Weekly Update sustainable over the medium-term although they are also looking at Corporate Briefs further improvements in certain areas like improvement in infrastructure, which is, you know, something that we all agree with.” Ayala Land Inc. (ALI) is ramping up its investment in a 1,100-hectare integrated mixed-use development in Alviera, Porac, Pampanga. Alviera General Manager Economic growth slowed to 6.1% last year from 7.2% expansion in John Estacio said ALI is hiking its spending budget for Alviera to P90 billion from 2013. The latest figure also came short of the government’s 6.5 to the previously announced P75 billion due to improvements that will be added to the master-planned township. The first phase of development will cover some 207 7.5% target but was still among the fastest growth rates in Asia during hectares, which will comprise of the following: new industrial park, country club, 2 the period. academic institutions and 3 residential communities. Mr. Estacio said, “following the success of ALI in developing large-scale master-planned communities like Makati, BGC and Nuvali, we envision a bright future ahead in our newest venture Business in the north.”

First Gen Corp. said it will start building additional hydropower facilities next year Worst-case Luzon power scenario unlikely on top of its existing project in Nueva Ecija… First Gen President and Chief Operating Officer Francis Giles Puno said a number of run-of-river hydropower a Department of Energy (DOE) official said Luzon’s power situation is projects are being readied by the Lopez-led energy firm. turning out to be more manageable than expected, with peak demand as yet failing to exceed the worst-case scenario of 9,000 megawatts Liberty Telecoms Holdings Inc., jointly owned by diversified conglomerate San Miguel Corp. (SMC) and Qatar Telecom, has completed its rehabilitation program (MW) projected last year. Ms. Irma Exconde, assistant director of the 20 months ahead of schedule, prompting a lower court to terminate its DoE’s Electric Power Industry and Management Bureau, said that with rehabilitation proceedings…Liberty Telecoms president and chief executive officer Bienvenido Bañas informed the Philippine Stock Exchange (PSE) that a lower court the country entering the last weeks of the dry season, the closest in Makati City has issued an order closing and terminating the rehabilitation Luzon has so far come to the 9,000 level was on May 6 when peak proceedings of the Liberty Group. demand was 8,791 MW. Ms. Exconde told legislators during a The Energy Regulatory Commission (ERC) has approved the 20-year power supply technical meeting of the House branch of the Joint Congressional agreement (PSA) between Manila Electric Co. (Meralco) and its affiliate San Power Commission (JCPC) that power supply on the main island is Buenaventura Power Ltd. Co. (SBPL)…SBPL is a joint venture between Meralco Power Gen (MGen), Meralco’s power generation arm, and New Growth BV, a expected to remain sufficient as long as new power plants stay on subsidiary of Electricity Generating Public Co. Ltd. (EGCO) of Thailand…the ERC track. She said: “Based on our evaluation, we will have a good approved the PSA which would result in a plant gate price of P4.2801 per kilowatt- hour. situation starting now and until 2020 if all committed projects are on time.” Philex Petroleum Corp. has pursued its bid to buy out the minority shareholders of Forum Energy Plc ahead of the planned delisting of the shares from the London Stock Exchange (LSE)…a document attached to Philex Petroleum’s disclosure Hi-tech TIN card coming soon yesterday showed that the Philippine-listed oil and gas firm announced its offer to acquire the minority interests in Forum for a cash consideration of 20 pence per Commissioner Kim Jacinto-Henares said the Bureau of Internal ordinary share. Revenue (BIR) hopes to roll out by next year an updated Taxpayer Identification Number (TIN) card that will electronically store personal Philippine Airlines Inc. (PAL) is set to mount flights to Australia and New Zealand in December…this is the second long haul flight to be launched after the data and eventually have other uses. According to Ms. Henares, “by Tan Group bought back the 49% interest of San Miguel Corp. (SMC) in PAL for next year, we will be issuing a TIN card that’s on a smart card rather $1.3 billion last October…PAL president and chief operating officer Jaime Bautista said the airline would launch flights to Cairns in Australia and Auckland in New than cardboard. The other thing we want to do is eventually... you will Zealand on Dec.1. swipe the card so the receipt will come out with your TIN number Philippine Long Distance Telephone Co. (PLDT) is in talks for joint venture because that’s already a requirement for VAT (value-added taxes) deals involving around 10 tech start-ups overseas, its chairman said…fresh from a deduction.” $15-million (P664.5-million) transaction with Malaysia’s iFlix, the country’s no. 2 most valuable listed company said it will decide on the 10 new deals “in the next few weeks”…last month, PLDT announced that it will invest $15 million in iFlix, a Weekly Indicators Kuala Lumpur-based video streaming start-up that will provide 600 million Southeast Asian consumers access to TV shows and movies from all over the world for a monthly fee. Growth target on track – BSP Supermarket venture of Puregold Price Club Inc. and Ayala Land Inc. (ALI) is The Bangko Sentral ng Pilipinas (BSP) or central bank said it sees the set to open 10 stores in the next 3 years. According to John Hao, vice president for economy growing within the government’s target of 7 to 8% this year investor relations at Puregold Price Club Inc., the supermarket chain will launch a new store format this year through the opening of Ayagold, the joint venture entity and next. Philippine economic growth slowed to 6.1% last year from of Puregold and ALI. The first Ayagold supermarket will be launched on July in 7.2% in 2013. The rate came short of the government’s 6.5% to 7.5% ALI’s UP Town Center, Quezon City, while a second outlet is being considered for target, but it was still among the fastest in Asia during the period. The opening this year. official 1st quarter gross domestic product (GDP) figure will be San Miguel Corp. and Korea Water Resources Corp. (K-Water) are set to released on the last week of May. The International Monetary Fund finally close their partnership for the 218-megawatt Angat Hydroelectric Power Plant in Bulacan…San Miguel chairman and COO Ramon Ang said he is leaving for (IMF) said earlier this month that economic growth in the 1st quarter Korea next week to formalize the signing…“Korea Water invited us to take 60%,” could have been faster than year-ago levels, but still slower than the Mr. Ang noted…he said once the 2 parties sign the partnership, San Miguel would surprise 6.9% expansion in the 4th quarter of 2014. take in local partners, with the approval of K-Water.

Xurpas Inc. is stepping up its acquisition spree with the purchase of a minority stake in American technology firm Quick.ly. for $1 million…in a regulatory filing, Remittance increase to slow – BSP Xurpas said it bought 666,666 shares representing 4.5% stake in Quick.ly at $1.50 BSP Deputy Governor Diwa Guinigundo said that growth in apiece for a total investment of $999,999…Quick.ly was founded in 2015 and is an remittances is expected to slow to an average pace of 5-6% annually operating company of Idealab, a creator and operator of technology businesses, based in Pasadena, California…Xurpas has previously expressed its intention to compared to the above-6% rate logged in previous years. According to aggressively expand throughout Southeast Asia. him, the “5-6% growth assumption” for money sent home by Filipinos abroad would be “more realistic” since “remittances have already matured”. Cash remittances reached a record-high $24.348 billion last year, up 5.8% annually and topping the upwardly revised 5.5% goal set by the central bank in November last year. That growth, however, was still slower than the 7.4%, 6.3%, 7.2%, and 8.2% seen in 2013,

The Wallace Business Forum, Inc. 3 May 18 - 22, 2015 Philippine Weekly Update

2012, 2011, and 2010, respectively. Remittances had likewise grown above 10% every year from 2002 to 2008, according to central bank data.

Infrastructure

Airport bidders win revised deal terms The Department of Transportation and Communications (DOTC) is revising the bidding terms for the P108.19-billion contract to develop, operate, and maintain 5 regional airports under the public-private partnership (PPP) scheme. According to DOTC’s genereal bid bulletin, “in view of the requests of interested participants, please be advised that the Qualification documents submission is hereby extended to 40 days after the release of the final version of the Instructions to Prospective Bidders (ITPB).” The deadline of submission of pre-qualification was originally scheduled for May 18. DOTC Spokesperson Michael Arthur Sagcal said, “the ITPB was first released in March but there are some changes which are now for CAAP’s (Civil Aviation Authority of the Philippines) review and approval.” The DOTC’s Pre-qualification, Bids and Awards Committee is set to issue another bulletin to confirm the actual submission date.

San Miguel, MPIC to vie anew for CALAx project Metro Pacific Investments Corp.’s MPCALA Holdings, Inc. and San Miguel Holdings Corp. yesterday submitted their technical and financial bids for the rebidding of the Cavite-Laguna Expressway (CALAx) project at the Department of Public Works and Highways (DPWH). They were the only companies that submitted bids for the P55.51-billion contract to build, operate and maintain the 47-km expressway, which will run between Kawit, Cavite and Biñan, Laguna. DPWH Secretary Rogelio Singson said the DPWH is confident that the evaluation of the bid documents of the 2 companies will finish within the prescribed period on May 26. The minimum bid price for the project was set at P20.1 billion, representing the premium that San Miguel offered to pay on top of the P35.42-billion project cost during the 1st tender in June 2014. Neither the Team Orion consortium of Ayala-owned AC Infrastructure Holdings Corp., Aboitiz Land, Inc. and Macquarie Infrastructure Holdings (Philippines) Pte. Ltd. – the highest compliant bidder in the first auction – nor MTD Philippines, Inc. joined the new auction. The project was rolled out again after Malacañang in November ordered DPWH to offer the deal in a new auction round.

Swiss challenge for NLEX-SLEX connector road set The Department of Public Works and Highways (DPWH) is expected to award the contract to build a toll road connecting the North Luzon Expressway (NLEX) and the South Luzon Expressway (SLEX) in the 4th quarter of the year instead of June. DPWH Secretary Rogelio Singson said that the agency is looking at rolling out the Swiss challenge for the unsolicited proposal of Metro Pacific Investment Corp. (MPIC) in October or November after successfully finalizing the right-of-way for the P14.8 billion connector road. DPWH has reached an agreement with the Department of Transportation and Communications (DOTC) on the right-of-way of the proposed toll road from the Philippine National Railways (PNR).

New auction readied for Clark Green City project Property firms will get a fresh chance to develop the first segment of the Clark Green City project, with the Bases Conversion and Development Authority (BCDA) removing thorny issues that had kept prospective bidders away from the initial tender last month. BCDA President and Chief Executive Officer Arnel Paciano Casanova told reporters the state agency is offering a bigger tract of land at 288 hectares (ha), from 245 ha initially, and removing the “restrictive” P2.5-billion upfront capital infusion requirement when it restarts the bidding process next week. The first auction had also set a floor premium of P500 million on top of the capital to be infused. Mr. Casanova said, “we hope to publish that [invitation to bid] on May 25. That’s the start of the bidding. If successful, hopefully we can sign the contract by September.” A pre-bid conference is slated on June 9 with the opening of bids set in July.

Congresswatch

House passes 3 key economic bills The House of Representatives approved on 3rd and final reading 3 key economic bills, including one that sets a fair competition policy to curb monopolies and unfair business practices. Approved on May 19 were the landmark Fair Competition Act; the bill amending the Cabotage Law; and the proposed Philippine Archipelagic Sea Lanes Act. The 3 bills are part of the list of priority measures of the House and the Senate. The fair competition bill, principally authored by Speaker Feliciano Belmonte Jr., seeks to prevent monopolies and protect the economy from unfair competition practices. Rep. Belmonte said the measure has direct benefits for ordinary Filipinos as it would boost the inflow of foreign direct investments. He said the measure would foster fair competition as well as lower costs that would benefit ordinary people.

The Wallace Business Forum, Inc. 4 May 18 - 22, 2015