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PH global competitiveness basically unchanged based on WEF data The World Economic Forum’s (WEF) Global Competitiveness Report 2017-2018 ranked the 56th out of 137 countries from 57th out of 138 countries in 2016-2017. Its score fell marginally to 4.35 from last year’s 4.36, on a 1-7 scale indicating the worst to the best grade.

he score of the countries were measured based on the 12 pillars of competitiveness (see figure on TGlobal Competitiveness Index). These pillars were further divided into 3 sub-indices “to provide unique insight into the drivers of their productivity and prosperity.” Based on the Global Competitiveness Report 2017-2018, Switzerland got the highest rank out of 137 countries. This was followed by the U.S. (2nd), Singapore (3rd), Netherlands (4th), and Germany (5th). Hong Kong (6th), Sweden (7th), United Kingdom (8th), Japan (9th), and Finland (10th) completed the list (see table on Global Competitiveness Report 2017-2018: Top 10 Countries). Among the 17 East Asia and Pacific countries included in the report, Indonesia and Brunei recorded the most significant improvements. On the other hand, Singapore, Cambodia, and Laos are the only countries that posted a decrease in their standings (see table on Global Competitiveness Report 2017-2018: East Asia and Pacific Countries). The of GDP, and government budget balance as a percentage of GDP. Philippines fell to 7th from 5th among 9 Southeast Asian states. The market size pillar posted an increase to 27th from 31st in Despite the slight decrease in the Philippines’ last year’s report. According to Mr. Guillermo Luz, private sector overall competitiveness score, it climbed up a notch co-chairman of the National Competitiveness Council (NCC), in its ranking. According to the WEF, it only suggests this is because of the improved purchasing power of consumers. that “other countries’ scores are falling faster.” In higher education and training pillar, the country The country performed well on some pillars – rose to 55th from 58th due to the improvements in macroeconomic environment; market size; higher higher education, including the implementation of the education and training; and labor market efficiency. K to 12 program and the technical-vocational training. In terms of macroeconomic environment, although the pillar was As for the labor market efficiency, it slightly increased down to 22nd in 2017-2018 report from 20th in 2016-2017, it was to 84th from 86th. “Labor is often overlooked by many the country’s highest rank among all the pillars. This is attributed people. The Philippines’ labor rules are quite rigid. This to its favorable economic indicators (such as gross domestic was a concern among investors. But now, the rules are product (GDP) and foreign direct investments), country credit getting more flexible than before,” Mr. Luz explained. rating, inflation management, government debt as a percentage

Philippine ANALYST BUSINESS October 2017 50 BUSINESS

The Philippines ranked 56th out of 137 countries in the World Economic Forum’s Global Competitiveness Report 2017-2018, but its score slightly fell to 4.35.

Among the 12 pillars of competitiveness measured in the report, the country performed well on macroeconomic environment; market size; higher education and training; and labor market efficiency.

GLOBAL COMPETITIVENESS INDEX

SUB-INDICES PILLARS 2016 RANKING 2017 RANKING 2016 SCORE 2017 SCORE Basic Requirements 65 67 4.6 4.6 Institutions 91 94 3.6 3.5 Infrastructure 95 97 3.4 3.4 Macroeconomic Environment 20 22 5.9 5.8 Health and Primary Education 81 82 5.6 5.6 Efficiency Enhancers 58 61 4.2 4.3 Higher Education and Training 58 55 4.6 4.6 Goods Market Efficiency 99 103 4.1 4.0 Labor Market Efficiency 86 84 4.0 4.0 Financial Market Development 48 52 4.2 4.2 Technological Readiness 83 83 3.6 3.8 Market Size 31 27 4.9 5.0 Innovation and 53 61 3.8 3.7 Sophistication Factors Business Sophistication 52 58 4.1 4.1 Innovation 62 65 3.4 3.3 Source: World Economic Forum’s (WEF) Global Competitiveness Report 2017-2018 & 2016-2017

“The country cannot advance to the next stage unless our public institutions are strengthened by addressing corruption and improving our legal and regulatory frameworks."

In contrast to these, the country also posted decrease In the goods market efficiency pillar, the Philippines in some pillars – business sophistication; goods market posted a decrease to 103rd from 99th in 2016-2017. This pillar efficiency; financial market development; institutions; includes the number of procedures to start a business, in which, innovation; infrastructure; and health and primary education. the country ranked 136th, the second to the worst globally. The business sophistication pillar had the most significant Also included in the pillar is the burden of custom procedures decrease with a 6-point drop to 58th from 52nd in last year’s in which the country placed 125th among 137 countries. report. Notably, according to the report, the 5 most problematic The financial market development pillar declined by 4 spots factors for doing business in the country are inefficient to 52nd from 48th. According to Mr. Luz, this is because the government bureaucracy; inadequate supply of infrastructure; “banks' credit exposure has been placed under tight watch corruption; tax regulations; and tax rates (see figure on Most despite (the) sound financial system.” Despite the decrease, Problematic Factors for Doing Business in the Philippines). this was the country’s 3rd highest pillar based on the report.

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GLOBAL COMPETITIVENESS REPORT 2017-2018: TOP 10 COUNTRIES

COUNTRY GLOBAL RANK Switzerland 1 U.S. 2 Singapore 3 Netherlands 4 Germany 5 Hong Kong 6 Sweden 7 United Kingdom 8 Japan 9 Finland 10 Source: World Economic Forum’s (WEF) Global Competitiveness Report 2017-2018 & 2016-2017

GLOBAL COMPETITIVENESS REPORT 2017-2018: EAST ASIA AND PACIFIC COUNTRIES

COUNTRY GLOBAL RANK Singapore 3 Hong Kong 6 Japan 9 New Zealand 13 Taiwan 15 Australia 21 Malaysia 23 South Korea 26 China 27 Thailand 32 Indonesia 36 Brunei 46 Vietnam 55 Philippines 56 Cambodia 94 Laos 98 Mongolia 101 Source: World Economic Forum’s (WEF) Global Competitiveness Report 2017-2018 & 2016-2017

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Note: From the list of factors, respondents to the World Economic Forum's Executive Opinion Survey were asked to select the 5 most problematic factors for doing business in their country and to rank them between 1 (most problematic) and 5. The score corresponds to the responses weighted according to their rankings. Source: World Economic Forum’s (WEF) Global Competitiveness Report 2017-2018

As for the institutions pillar, it went down by 3 rankings to 94th Gov’t to ease foreign limits in retail trade from 91st in the last year’s report. Meanwhile, innovation was cut to 65th from 62nd; infrastructure decreased to 97th from 95th; and industry health and primary education declined slightly to 82nd from 81st. According to Mr. Luz, to better develop competitiveness The government is planning to decrease the foreign capital in the country, improvements in the next 1-2 years is needed entry requirement in the retail trade industry in order in the areas of government bureaucracy, ports and airports, to allow more participation from foreign traders which as well as in primary education and health. This was backed would enhance further competition. This is in line with the up by Makati Business Club (MBC) executive director Peter Duterte administration’s goal to liberalize the 11th Foreign Perfecto, explaining that “implementing the plans under Investment Negative List (FINL). However, an amendment the Build, Build, Build infrastructure program is critical for in the Retail Trade Liberalization Act of 2000 is required,and the effective functioning of a growing Philippine economy.” may be hard to get. Furthermore, investment in technological readiness, higher education, innovation, and science and technology The National Economic Development Authority (NEDA) will also be needed in the next 3-5 years, as per Mr. Luz’s is currently reviewing the final draft of the 1st FINL (labeled recommendation. He explained that "the way the economy as “among the most liberalized”) to be signed by President is structured is that 3-5 years from now, investors will be Rodrigo Duterte. NEDA Secretary Ernesto Pernia said that one thinking of technological readiness. They would ask, how of the changes in this year’s list is to cut the foreign capital limit is your innovation? How is your technological readiness?" to $200,000 from the current $2.5 million. This would result in The passage of priority bills identified by the business greater participation of foreign traders in the industry, as well sector (such as the Comprehensive Tax Reform Program) as to encourage more local traders to innovate and create better must be given focus by the Congress, instead of the various products, Sec. Pernia explained. “The purpose (of the FINL) is political maneuvers. MBC chairman Edgar Chua said "(the to make consumers happier,” he added. However, the Congress country) cannot advance to the next stage unless our public should be tapped to amend the Retail Trade Liberalization Act of institutions are strengthened by addressing corruption 2000 (or Republic Act 8762) in order to liberalize the industry. and (improving) our legal and regulatory frameworks." On the other hand, European Chamber of Commerce of the Philippines (ECCP) President Guenter Taus argued that “there shouldn’t even be a paid-up capital at all, citing other countries where foreign investors who plan to set up their business would only need to register their company and start building their business from there.” In comparison with other

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One of the changes in this year’s FINL is to cut the foreign capital limit to $200,000 from the current $2.5 million.

This would result to a greater participation of foreign traders in the industry, as well as to encourage more local traders to innovate and create better products.

The easing of the restriction is believed to bring the Philippines at par with its Southeast Asian neighbors in the retail industry.

However, PRA Vice Chair Roberto Claudio argued that the $2.5 million threshold intends to protect the MSMEs in the retail sector.

ASEAN countries, the Philippines is noted to have one of Various stakeholders stand against compressed the highest minimum paid-up capital for foreign retailers. workweek In Singapore, there is no minimum capital required for any foreign retailers while in Thailand, a minimum capital of The Employers Confederation of the Philippines (ECOP), $598,890 is needed to own a retail business. Given this, the the Philippines Exporters Confederation Inc. (PhilExport), easing of the restriction is believed to bring the Philippines at as well as the Tripartite Industry Peace Council (TIPC) have par with its Southeast Asian neighbors in the retail industry. expressed their opposition towards the newly approved House Although foreign chambers and the country’s economic officials had lauded the easing, the Philippine Retail Association Bill (HB) 6152. The stakeholders argued that this would (PRA) stated its opposition. PRA Vice Chair Roberto Claudio sacrifice workers’ health rather than improve productivity. argued that “this move to liberalize the retail industry would put small Filipino enterprises at a disadvantage, while giving foreign Last August, the House of Representatives passed on firms the upper hand.” Mr. Claudio also noted that the $2.5 3rd and final reading HB 6152 or “An Act Increasing The million threshold intends to protect the micro, small and medium Normal Work Hours Per Day Under a Compressed Work Week enterprises (MSMEs) in the retail sector – the most accessible Scheme.” The bill intends to reduce the number of workdays point of entry to doing business. “So, instead of helping Philippine (from 5-6 days a week to 4 days a week) while increasing entrepreneurs, we give them an undue and unfair competition the number of working hours (up to 12 hours) per day to which may be detrimental. One foreign retailer who would succeed encourage balanced work life; business competitiveness; work would result to one Filipino retailer who would fail,” he claimed. efficiency; labor productivity and cost efficiency; and to give Taking this into consideration, Department of Trade and employers the option to apply the appropriate flexibility in Industry (DTI) Secretary Ramon Lopez explained that the fixing hours of work in line with their business environment. liberalization on some industries would create opportunity HB 6152 was introduced by 25 legislators (see House Bill 6152 for employment as well as more outlets where SMEs Authors). Under the bill, employees are also entitled to obtain could deliver their products. He also noted that a “floor overtime pay if they have worked for more than 48 hours, as well requirement” must be established prior to the liberalization as up to 3 days off from work every week. In addition, the DOLE of the retail industry in order to protect the local traders. is mandated to issue the implementing rules and regulations. As to approval of the FINL, the easing of restriction Baguio Representative Mark Go, one of the authors of the bill, might take a while since Sec. Lopez remarked that it stated “this won’t penalize companies who will not implement “does not appear to be a priority for the legislators.” But a 4-day work week since this is only optional.” Meanwhile, in nonetheless, the government is also planning to introduce the Senate, a similar bill (Senate Bill 1571) has been filed by the amendments in the Constitution with regard to easing Senator Joel Villanueva but it is still pending at the Committee foreign ownership in selected industries by next year. on Labor, Employment and Human Resources Development. ECOP, PhilExport, as well as the TIPC led by DOLE have expressed their opposition to HB 6152. DOLE Upon approval of the FINL, the easing of Undersecretary Dominador Say argued that no legislation restriction might take a while since Sec. Lopez is needed for a compressed workweek as the DOLE could impose several mechanisms such as issuing department remarked that it “does not appear to be a orders similar to the objective of the bill. USec. Say also priority for the legislators.” enumerated the following consequences if the law is pursued:

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House Bill 6152 intends to reduce the number of workdays while increasing the number of working hours per day.

HOUSE BILL 6152 AUTHORS

Baguio City District Rep. Mark Go Ilocos Sur 1st District Rep. Deogracias Victor Savellano Apayao Rep. Eleanor Bulut-Begtang Isabela 4th District Rep. Ma. Lourdes Aggabao Pangasinan 1st District Rep. Jesus Celeste Pangasinan 4th District Rep. Christopher De Venecia Ilocos Norte 1st District Rep. Rodolfo Farinas Benguet Rep. Ronald Cosalan Isabela 3rd District Rep. Napoleon Dy Pangasinan 2nd District Rep. Leopoldo Bataoil Cavite 2nd District Rep. Strike Revilla Pangasinan 6th District Rep. Marilyn Primicias-Agabas Nueva Vizcaya Rep. Luisa Cuaresma Nueva Ecija 2nd District Rep. Micaela Violago Cagayan 3rd District Rep. Randolph Ting ANAKAPAWIS Party List Rep. Ariel Casilao AASENSO Party List Rep. Teodoro Montoro 2nd District Rep. Leo Rafael Cueva Northern Samar 2nd District Rep. Edwin Ong Leyte 3rd District Rep. Vicente Veloso Albay 1st District Rep. Edcel Lagman Misamis Oriental 1st District Rep. Peter Unabia Leyte 1st District Rep. Yedda Marie Romualdez Batangas 6th District Rep. Vilma Santos-Recto A TEACHER Party List Rep. Julieta Cortuna

Source: HB 6152

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The compressed work week is not feasible for jobs that requires heavy physical work and strict office hours.

hh Add risk to employees that are not organized as it could be Sluggish PH auto sales in August 2017 forcibly implemented by unscrupulous employers since their workers do not have the power of representation; Automotive sales posted an increase by 8.7% to 35,309 units hh Lay-off of workers, such as those in a 3rd shift since the first 2 in August 2017 from 32,472 units in August 2016, according shifts with extended working hours can already cover for them; to the latest report jointly released by the Chamber of hh Decline in work productivity and efficiency due to the expected Automotive Manufacturers of the Philippines Inc. (CAMPI) fatigue factor; and and Truck Manufacturers Association (TMA). Despite the hh Greater threats to workers’ health as they could be prone to increase in sales, this is the slowest in 4 months since the hypertension, stress, over fatigue, and injuries, among others. recorded 29,038 units sold in April 2017. Furthermore, ECOP chairman Donald Dee cited a 4-day The sluggish sales were due to the recent restriction by work week experiment conducted by ECOP members 10 years the Land Transportation Franchising and Regulatory Board ago. Wherein from the experiment, they had encountered (LTFRB) on Transport Network Companies (TNCs) Grab workers who were fainting due to fatigue resulting in and Uber. CAMPI and TMA officials also attributed the “negative effect on work productivity and efficiency.” sales to the “seasonal decline,” as well to the traditionally Concurring with ECOP and DOLE’s position, TPIC, a low sales for the month of August due to the “ghost month” council composed of representatives from various companies and phenomenon – wherein buyers postpone their business labor unions, stated that the worldwide trend is gearing towards decisions. Hence, the 35,309 units of automotive sales in shorter number of working hours rather than prolonging them. August 2017 were 4.4% lower than the 36,951 units sold in July. In relation with ECOP’s experiment, TPIC noted it sacrifices the For August 2017 alone, the sale of passenger cars employees’ health rather than increasing productivity. They also increased by only 1.1% to 11,258 units from the 11,136 argued this would decrease the workers’ family time, taking into units sold in August 2016. Meanwhile, commercial consideration the worsening traffic situation in Metro Manila. vehicle (CV) sales rose to 24,051 units, 12.7% higher PhilExport also stand against the bill remarking that “the compared to 21,336 units sold in the same month last year. status quo (should) be maintained by leaving it to employers Among the CV sub-segments, the light commercial to determine the best working hours for their respective vehicles (LCV) were the lead, comprising 64.44% of companies, subject to their particular needs, location and CV sales with 15,499 units sold, 3.3% higher than July employee situations.” The stakeholders also noted that the 2017’s 15,000 units sold. On the other hand, the Asian compressed workweek is not feasible for work (such as in utility vehicle (AUV/MPV) sales posted a decrease by construction, manufacturing, banking and logistics industries) 11.6% to 6,864 units compared to last month’s 7,764 units. that requires heavy physical work and strict office hours. Truck and bus sales continued to post positive figures. Light truck sales rose by 22.8% to 1,041 units from 848 units in July 2017. In addition, Category 4 heavy duty truck and bus sales also reported an increase to 404 units, 3.3% higher than last month’s 418 units, while category 5 heavy duty truck and bus sales was up by 10.5% to 243 units from last month’s 220 units.

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The Philippine automotive sales in August 2017 reached 35,309 units. This is the slowest in 4 months since 29,038 units sold in April 2017.

The slowdown of sales was due to the recent restriction by the LTFRB on TNCs, as well as to the traditionally low sales due to the “ghost month” phenomenon.

PHILIPPINE AUTOMOTIVE SALES

JANUARY- JANUARY- AUGUST 2016 AUGUST 2017 % CHANGE % CHANGE AUGUST 2016 AUGUST 2017

Total Industry 32,472 35,309 8.7% 229,919 268,424 16.7%

Passenger Cars 11,136 11,258 1.1% 84,926 91,139 7.3%

Commercial Vehicles 21,336 24,051 12.7% 144,993 177,285 22.3%

Source: Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI)

CAMPI still expects total vehicle sales to surpass its 2017 target of 430,000-450,000 units despite the turnout of sales in August.

For the first 8 months of 2017, total vehicle sales remained “August sales result remained stable, driven by the good optimistic with 16.7% increase to 268,424 units from last sales performance of key models from major manufacturers. year’s 229,919 units. Passenger car sales also grew by 7.3% In addition to this is the competitive promotional support and to 91,139 units from 84,926 units, while CV sales posted marketing activities,” CAMPI president Rommel Gutierrez an increase by 22.3% to 177,285 units from 144,993 units. said. CAMPI still expects total vehicle sales to surpass its As for the top performing manufacturers for January to August 2017 target of 430,000-450,000 units despite the downturn 2017, Toyota Motor Philippines Corp. had the biggest market share of sales in August. This is based on the hopes of continued with 44.1% share, followed by Mitsubishi Motors Philippines motorization in the country; attractive financing options for car Corp. with 17.7%. Ford Motor Company Philippines Inc. ranked buyers; and a probable boost in sales as people will hasten to 3rd with 8.5%, Isuzu Philippines Corp. finished 4th with 6.8%, buy cars in order to avoid the proposed hike in auto excise tax and Honda Cars Philippines Inc. trailed behind in 5th with 6.7%. under the Tax Reform for Acceleration and Inclusion (TRAIN).

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MINING, OIL, & GAS The EITI Board noted that, “the Philippines presents a dynamic case of EITI implementation, with its fast-paced and innovative multi-stakeholder group (MSG) engaging in strategic discussions linking the EITI to national priorities for the extractive sector.” PH 1st country to meet global extractives The EITI Board also noted that the Philippines has achieved the broader objective of revenue transparency despite challenges transparency standard in covering the coal sector, where further work is needed to ensure full transparency. EITI Chairman Fredrik Reinfeldt said meeting The Philippines was cited as the 1st country to meet all all the EITI requirements was a milestone for the EITI and, more the requirements in the governance standards set forth by importantly, a significant achievement for all the stakeholders the Extractive Industries Transparency Initiative (EITI) in the Philippines that have supported EITI implementation. for the extractive sector – the oil, gas, and mining sectors. The Philippines underwent the EITI validation process The country obtained a “satisfactory progress” rating in beginning January this year. Last May 2017, the country earned implementing the 2016 EITI standard1. several citations for best practices in the implementation of global standards on the management of mining resources According to the Validation report of the EITI, the during the 37th board meeting of the EITI in Oslo, Philippines exceeded the minimum requirements set Norway (see PH recognized for best mining practices). by the EITI standard. These areas include disclosing The Philippines will be revalidated by the EITI in 2020. information on the legal and fiscal framework, disclosing Meanwhile, DOF Assistant Secretary and PH-EITI Chair, contracts, revenue management, revenue expenditure and Teresa Habitan, said that ‘’working through differences but with social expenditures (see figure on PH EITI Requirements). a singular goal in mind has been the framework of PH-EITI. All The report also stated that the engagement of the PH-EITI2 stakeholders in the multi-stakeholder group value transparency in formulating recommendations for reform and driving these in the manner by which the development and management of the proposals in the sector, including the distribution of mining extractive sector must move forward. What has been validated revenue from central to local levels and revenue management for the Philippines is the perseverance of all stakeholders to within local governments, “has ensured the EITI has had tangible do what is right and what is best not only for the extractive impact, particularly in terms of reform of government systems.” industries but more importantly for the country and our people.” The Chamber of Mines of the Philippines (COMP) also lauded the EITI decision, saying the industry has worked 1The 2016 EITI Standard provides a set of requirements for data disclosure or transparency in the hard over the past years. “This validation of our efforts at industry, from the awarding of licenses and contracts to monitoring production, revenue collection, and allocation, as well as socio-economic contribution of the industry. EITI is being implemented transparency reporting could not have come at a better time. worldwide by 52 countries to date, including the Philippines, in a bid to be found compliant with the EITI Standard after a rigorous Validation process. The mining industry is under strict scrutiny by government, and this recognition that the mining industry is fully transparent in 2The Philippines established the Philippine Extractive Industries Transparency Initiative (PH-EITI) in 2013, through Executive Order No. 147 issued by then President Benigno Aquino III. PH-EITI is its payment and reporting of revenues to government will be of steered by a multi-stakeholder group chaired by the Department of Finance (DOF) and composed of representatives from government, industry, and civil society. great help,” COMP executive director Ronald Recidoro said.

The country obtained a “satisfactory progress” rating in implementing the 2016 EITI standard.

All stakeholders in the multi-stakeholder group value transparency in the manner by which the development and management of the extractive sector must move forward.

Philippine ANALYST BUSINESS October 2017 58 BUSINESS

PH EITI REQUIRMENTS

3

Source: EITI 2017

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COMP chairman Gerard Brimo added that the cooperation Lepanto communication head Salvador Mendizabal shown by all groups in the multi-stakeholder group, the said it was “considering its options vis-a-vis the decision.” leadership of the DOF and the dedication of the National The company has filed its notice of appeal before the OP Secretariat have all contributed to this successful outcome. last February 14 — the same day it received the DENR’s Given this, there are legislative bills filed in the suspension order — and appeal memorandum on March 15. House of Representatives (House Bill No. 4116) and The mining firm was suspended as the DENR audit team in the Senate (Senate Bill No. 1125) to institutionalize found Lepanto’s mine in northern Benguet province “has the PH-EITI. As of February 2017, the 2 bills are being unregistered treatment, storage and disposal facility for the considered at the committee-level in each of the 2 houses. detoxification process for the mine tailings". Four other mining The recognition of EITI in the Philippines shows that the firms were also suspended on the grounds that its mining country is ensuring its transparency and accountability in the sites were situated inside a watershed. These were the Berong mining sector and its compliance to global standards. This Nickel Corp., CitiNickel Mines and Development Corp., sends a positive signal in encouraging investors and current OceanaGold Phils., and Strong Built Mining Development Corp. players to pursue further expansion plans. If the Duterte Meanwhile, the Chamber of Mines of the Philippines (COMP) administration prioritizes institutionalizing the PH-EITI, welcomed OP’s favorable response to one of its members, saying it will be a strong indication that the current government the suspension order issued by Ms. Lopez really had no basis. is committed to full transparency and accountability. “This sends a positive signal that the government is starting to act on these pending matters which have largely caused uncertainties in the industry,” COMP executive director Ronald Recidoro said. Suspension order vs Lepanto Mining lifted The Office of the President’s decision came before the results of a separate review being conducted by the Mining The Office of the President (OP) has lifted the 8-month Industry Coordinating Council (MICC) on the country’s suspension order on Lepanto Consolidated Mining Company. existing mines. DENR Secretary Roy Cimatu said his The mining firm was among the 27 mining firms that has policy direction would heavily rely on the findings of MICC been ordered closed or suspended by former Department that are expected to be completed by the end of the year. The lifting of the suspension will have a positive impact of Environment and Natural Resources (DENR) Secretary in the mining sector particularly those large-scale mining Gina Lopez in February 2017 in a crackdown against illegal operations affected by former DENR Sec. Lopez’s suspension. mining in the country. Mining firms would definitely show considerable interest in the sector, if the government continues to advocate Lepanto said that it has received the OP’s decision dated sustainable and long-term solutions to the sector. Prolonged Oct. 12 wherein the firm was given 6 months to implement suspension and closure of mining operations in the country appropriate mitigating measures and was ordered to pay fines would strain the mining firms’ potential investments, as of P27,275 to the Mines and Geosciences Bureau (MGB) and well as affect the sector’s growth and production capability. P100,000 to the Environmental Management Bureau (EMB). The MGB and EMB are also directed to conduct a monthly inspection on Lepanto’s compliance with the directives, as well as submit a monthly report to the OP regarding the progress of the corrective measures. The OP decision also stated that in the event the company fail to comply with the above conditions, the suspension order will be reinstated.

The mining firm was given 6 months to implement appropriate mitigating measures.

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This sends a positive signal that the government is starting to act on these pending matters which have largely caused uncertainties in the industry.

I.T. UPDATE

BPO investments slowdown in 1H2017 According to the Investment Promotion Agency (IPA), IT investment pledges have also been sluggish under the New investment pledges in the Information Technology Philippine Economic Zone Authority (PEZA). From January and Business Process Management (IT-BPM) sector in the to June 2017 period, BPO investments posted a 33% drop Philippines continued to decline in the 1st half of 2017, due to P8.5 billion in 1H2017 from P12 billion in 1H2016, to the current move of the government to modify the sector’s while IT investments under the Board on Investments (BOI) tax policy, as well as the looming uncertainty on U.S. policy. registered a 285% increase to P67.9 million from 17.6 million. Out of all the IPAs, PEZA accounted for the biggest According to the latest data from the Philippine Statistics share in pledges or more than 93% of overall commitments Authority (PSA), investment commitments in the business in the 1st semester of this year (see table on Total Approved process outsourcing (BPO) sector totaled P9.08 billion in the Foreign Investments in the ICT Industry.) 1st semester of 2017, a 28% drop from P12.6 billion in the same hh The IT-BPM sector attributed the weak BPO investments to period last year. For the 2Q2017 alone, IT investments reached the following factors: P4.9 billion, falling 22% from P6.27 billion registered in 2Q2016. hh U.S. President Donald Trump’s America First policy; Notably, the growth rate of BPO pledges has been declining hh Security concerns due to the Duterte administration’s war since 3Q2016 (see figure on ICT Investments), despite the 35% on drugs; increase in pledges during 2Q2016. In 2016, IT investments posted a 22.6% decline to P30.74 billion from P39.73 billion in 2015. hh Martial law in ; Department of Trade and Industry (DTI) Secretary Ramon hh The slow presidential proclamation of new PEZA-registered Lopez said the IT-BPM firms perhaps are just taking time in economic zones; and due diligence as well as a wait-and-see approach on the U.S. hh The uncertainty surrounding the comprehensive tax reform policy for companies locating offshore. The international program of the Duterte administration that comprises 5 perception of the Philippines engendered by the President's packages that include proposals to broaden the base of the outspokenness would also have had an impact. Sec. Lopez value-added tax and to rationalize fiscal incentives. added that there were still “anchor accounts expanding using innovative operating models,” noting that they were retooling Meanwhile, Information Technology and Business Process the workforce of the IT-BPM industry to use new technology Association of the Philippines (IBPAP) president and CEO such as systems equipped with artificial intelligence (AI). Rey Untal remained optimistic that the sector’s investment pledges would be sustained after the Senate version of the 1st tax reform package pushed to keep the current tax incentives

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ICT Investments 1Q2016-2Q2017

18,000.00

16,000.00

14,000.00

12,000.00

10,000.00

8,000.00

6,000.00

4,000.00

2,000.00

0.00 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017 Series 1 6,340.10 6,270.10 2,802.11 15,332.60 4,184.70 4,896.50

Source: Philippine Statistics Authority (PSA)

The growth rate of BPO pledges has been declining since 3Q2016.

IT investment pledges have been also sluggish under the Philippine Economic Zone Authority (PEZA).

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Any reduction in the current BPO tax perks would dampen the country’s competitiveness compared to rival markets.

TOTAL APPROVED FOREIGN INVESTMENTS IN THE ICT INDUSTRY (IN MILLION PESOS) AGENCY 1H2017 1H2016 GROWTH RATE AFAB 240.8 6.6 ** BOI 67.9 17.6 285.0 BOI ARMM - - - CDC 141.2 52.4 169.6 CEZA 26.2 103.3 -74.6 PEZA 8,055.2 11,953.6 -32.6 SBMA - 0.9 - TOTAL 8,531.3 12,134.5 -29.7 Source: Philippine Statistics Authority (PSA) Sources of basic data: Authority of the Freeport Area of Bataan (AFAB), Board of Investments (BOI), BOI-Autonomous Region of Muslim Mindanao (BOI-ARMM), Clark Development Corporation (CDC), Cagayan Economic Zone Authority (CEZA), Philippine Economic Zone Authority (PEZA), and Subic Bay Metropolitan Authority (SBMA).

for the industry. Mr. Untal added that any reduction in the current tax perks would dampen the country’s competitiveness compared to rival markets, which, in their own capacities, are aggressively working to attract more foreign direct investments. The Senate Tax Reform for Acceleration and Inclusion (TRAIN) bill version or Senate Bill (SB) 1592 ensured that the zero-rating would not be removed through the insertion of specific provisions relating to sales to entities registered with the ecozones and freeport zone authorities. Senator Juan Edgardo “Sonny” Angara explained that foreign investments are crucial in sustaining the country's economic growth and in providing jobs for millions of Filipinos. "We value such contribution that's why the government has been very supportive of the industry by granting them various incentives. We will ensure that such incentives will remain intact,” Sen. Angara emphasized. The government’s intent to rationalize the fiscal incentives for BPO companies would weaken the country’s competitiveness as one of the most attractive IT sites globally, as well as hinder the sector’s growth. Prospective investors would possibly put on hold its expansion plans in the country and could shift investments to other destinations that do prioritize BPO as an industry driver.

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LIST OF BOI-REGISTERED PROJECTS - OCTOBER 2017

PROJECT COST EQUITY INDUSTRY ACTIVITY (IN PHP MILLION) LOCAL/FOREIGN

AGRICULTURE, FORESTRY, AND FISHERY

Exclusive Al Rubi, Inc. Producer of broilers (Contract Growing Scheme) 72.00 100% Filipino

CONSTRUCTION

Public Private Partnership (PPP) Project (MRT Line 7 Project) - North SMC Mass Railway Transit 7 Inc. 79,191.02 100% Filipino Avenue, Quezon City to San Jose del Monte, Bulacan

Eagle Cement Corporation Producer of cement (Line 3) located in Brgy. Akle, San Ildefonso, Bulacan 6,500.00 100% Filipino

South Western Cement Corp. Producer of cement in Brgy. Looc, Malabuyoc, Cebu 12,500.00 100% Filipino

ELECTRICITY, WATER, AND GAS

Renewable energy developer of hydropower resources (1.2 MW Irisan 3 Hedcor, Inc. - 100% Filipino Hydroelectric Power Project) in Benguet

Renewable energy developer of hydropower resources (0.3 MW Talomo2b Hedcor, Inc. - 100% Filipino Hydroelectric Power Projects) in Tugbok, Davao City

Renewable energy developer of hydropower resources (0.65 MW Talomo Hedcor, Inc. - 100% Filipino 2a Hydroelectric Power Projects) in Tugbok, Davao City

Renewable energy developer of hydropower resources (8 MW Ampohaw Hedcor, Inc. 100% Filipino Hydroelectric Power Projects) in Sablan, Benguet

Renewable energy developer of hydropower resources (1.92 MW Talomo 3 Hedcor, Inc. - 100% Filipino Hydroelectric Power Projects) in Pequeno, Davao City

Renewable energy developer of hydropower resources (4.5 MW Bineng 3 Hedcor, Inc. - 100% Filipino Hydroelectric Power Projects) in La Trinidad, Benguet

Renewable energy developer of hydropower resources (0.6 MW Talomo 2 Hedcor, Inc. - 100% Filipino Hydroelectric Power Projects) in Tugbok, Davao City

Renewable energy developer of hydropower resources (2.4MW Salangan Hedcor, Inc. - 100% Filipino Hydroelectric Power Projects) in Sal-Angan, Itogon, Benguet

Renewable energy developer of hydropower resources (2.4 MW Lower Hedcor, Inc. - 100% Filipino Labay Hydroelectric Power Projects) in Bakun, Benguet

Renewable energy developer of hydropower resources (3.6 MW Lon-oy Hedcor, Inc. - 100% Filipino Hydroelectric Power Projects) in Bakun, Benguet

Solar Philippines Commercial Rooftop Projects, Renewable energy developer of solar energy resources (100 MW - 5,975.77 100% Filipino Inc. Medellin Solar Power Project) in Medellin, Cebu

Solar Philippines Commercial Rooftop Projects, Renewable energy developer of solar energy resources (100 MW - Iba- 5,975.77 100% Filipino Inc. Palauig Solar Power Project) in Iba and Palauig, Zambales

Renewable energy developer of hydropower energy resources (15.1MW Alson's Energy Development Corporation 3,524.15 100% Filipino Siguil Hydroelectric Power Projects) in Maasim, Sarangani City

FOOD AND BEVERAGE MANUFACTURES

Producer of raw sugar and its by-products Brgy. Caloocan, Balayan, 67% Filipino Universal Robina Corporation 610.60 Batangas 33% Various

HOTEL, RESTAURANT, AND LEISURE SERVICES

Operator of tourist accommodation facility (Seda Capitol Central - Lacson Capitol Central Hotel Ventures, Inc. 661.90 100% Filipino St. cor. North Capitol Road, City)

Operator of tourist accommodation facility (Central Park Reef Resort) 66% Filipino 888 Subic Inc. 197.00 located at 888 National Highway, Barrio Barretto, Olongapo City 34% American

Operator of theme park (Seven Seas Waterpark and Resort) in Barra, UC-1 Corporation 267.00 100% Filipino Opol, Misamis Oriental

MISCELLANEOUS MANUFACTURES

Producer of fortified compressed soil (FCS) bricks in No. 9024 Brgy. Liciada Innovations, Inc. 41.69 100% Filipino Liciada, Bustos, Bulacan

OFFSHORING AND OUTSOURCING

99.95% British Cloudengine Room, Inc. Services export provider (BPO - Remote staffing services) 36.43 Virgin Islander

PAPER AND PARE PRODUCTS

Smartflute Corrugated Packaging Company, Inc. Producer of corrugated boxes in Carmen, Daval del Norte 455.33 100% Filipino

Philippine ANALYST BUSINESS October 2017 64 BUSINESS

PETROLEUM PRODUCTS

Bulk marketing of petroleum products (Tayud, Consolacion, Cebu Oil 91% Filipino Phoenix Petroleum Phils., Inc. Depot with 16.70 Million liters combined capacity of 6 storage tanks in 470.00 9% British UK Consolacion, Cebu

REAL ESTATE AND PROPERTY DEVELOPMENT

Developer of economic and low-cost housing project (Deca Homes Mulig - 8990 Housing Development Corporation 763.15 100% Filipino Horizontal) in Brgy. Mulig, Toril District, Davao City

Developer of economic and low-cost housing project (Torie Place - Bleaushea Properties Corporation 267.50 100% Filipino Horizontal) in Brgy. Lambakin, Marilao, Bulacan

Developer of economic and low-cost housing project (Micara Estates - Micara Land Inc. 162.58 100% Filipino Tanza Phase 1) in Brgy. Sahud Ulan, Tanza, Cavite

Developer of economic and low-cost housing project (Micara Estates - Micara Land Inc. 174.65 100% Filipino Tanza Phase 2) in Brgy. Sahud Ulan, Tanza, Cavite

Developer of economic and low-cost housing project (Mondello Homes - 80% Filipino Cumberland Development Corporation 255.35 Horizontal) in Brgy. Guitnang Bayan I, San Mateo, Rizal 20% Chinese

Developer of economic and low-cost housing project (Prima Clove Tanza Tanza Properties II, Inc. 431.12 100% Filipino Phase 2A - Horizontal) in Brgy. Tanuan, Tanza, Cavite

Developer of economic and low-cost housing project (Prima Clove Tanza Tanza Properties II, Inc. 478.06 100% Filipino Phase 2B - Horiozntal) in Brgy. Tanauan, Tanza, Cavite

P.A. Alvarez Properties and Development Developer of economic and low-cost housing project (St. Joseph Village 7 95% Filipino 88.00 Corporation Phase 5-A - Horizontal) in Brgy. Marinig, Cabuyao, Laguna 5% Canadian

STORAGE AND WAREHOUSING

ECA Resources, Inc. Operator of cold storage facilities in Brgy. Tambler, General Santos City 110.00 100% Filipino

investments through the construction of Calaca, Batangas LPG Terminal South Pacific Inc. 1,763.00 100% Filipino Phase 2 with 10,000 MT LPG Storage Tanks

TOTAL 120,972.07

Philippine ANALYST BUSINESS October 2017 65 BUSINESS

PEZA APPROVED PROJECTS -2nd QUARTER 2017 EQUITY INDUSTRY ACTIVITY ZONE LOCAL/FOREIGN APPAREL AND TEXTILE MANUFACTURES Manufacture of men's and women's underwear such as 98% - Korean DCT MFG. INT'L. INC. Golden Mile Business Park - SEZ brassieres and panties 2% - Filipino AUTOMOTIVE TRADE GOSHI PHILIPPINES, INCORPORATED Assembly of K89 muffler 100% - Japanese Laguna Technopark - SEZ CHEMICAL AND CHEMICAL PRODUCTS

58% - Syrian PHILI BIO PEAT, INC. Manufacture and export of coco fiber and peat products 28% - Emirati Gensan Economic Zone 14% - Filipino

ELECTRICITY, WATER, AND GAS FDC RETAIL ELECTRICITY SALES Economic Zone Utilities Enterprise-Retail Electricity Supplier 100% - Filipino Northgate Cyberzone CORPORATION (RES) Kamanga Agro-Industrial Economic SARANGANI ENERGY CORPORATION Coal-fired power plant facilities by another 105MW 100% - Filipino Zone ELECTRONICS Manufacture and processing of micro electro-mechanical AM SWISS MICROTEC INC. 99.94% - Korean Mactan Economic Zone components Engage in M-Series system for advanced semiconductor DECA TECHNOLOGIES INC. (PHIL. BRANCH) 100% - American Laguna Technopark - SEZ packaging technology Manufacture, repair and rework of other related gadgets of EMS COMPONENTS ASSEMBLY, INC. 100% - Filipino Laguna Technopark - SEZ LED Luminaires Assembly of mobile communication equipment; manufacture GLOBAL MOULDING TECHNOLOGY, INC. of radio transceivers; pager units; and assembly and repair of 99.99% - Japanese Cavite Economic Zone DC-DC converter Remanufacture, repair, assembly, test and export of various HARVESTAR TECHNOLOGIES INC. wireless mobile devices, products, components, systems and 100% - Hong Kong Light Industry & Science Park III - SEZ related accessories IONICS EMS, INC. Manufacture of LCD and touch panel for mobile phone 98.12% - Filipino Light Industry & Science Park I - SEZ Engage in assembly, manufacturing of transformer, AC DC KYUNG IL MANUFACTURING PHILS. INC. 99.89% - Korean Angeles Industrial Park - SEZ reactor, inductor, etc. OPTOWAVE MANUFACTURING PHILIPPINES Manufacture of computer periphiral 99.8% - Korean Cavite Economic Zone INC. Engage in repair of semiconductor equipment and parts and PTW PHILIPPINES PRIVATE CO. LTD. 99.9% - Singaporean Pampanga Economic Zone maintenance services STMICROELECTRONICS, INC. B800 project 99.99% - Dutch Light Industry & Science Park II - SEZ STMICROELECTRONICS, INC. Manufacture of DAM and Fill - D18 99.99% - Dutch Light Industry & Science Park II - SEZ Manufacture of LED Lights, Lighting Luminaires and other TAOLIGHT PHILIPPINES INC. 99.90% - Hong Kong Laguna Technopark - SEZ related products TSUKIDEN ELECTRONICS PHILIPPINES, INC. Engage in Ink jet printer control board assembly 99.99% - Japanese Laguna Technopark - SEZ FOOD AND BEVERAGE MANUFACTURES DASOLand: A Family Adventure and FULL CIRCLE CRAFT DISTILLERS CO., INC. Engage in the production of high quality artisanal spirits 100% - Filipino Leisure Park MACHINERY AND EQUIPMENT

JIO MHW GLOBAL CHANNEL Fabrication of metal parts and assembly & development of 99% - Korean People's Technology Complex - SEZ MANUFACTURING CORP. automated machines 1% - Filipino

METAL INDUSTRIES

92% - Taiwanese ASAM INDUSTRIES INC. Manufacture of CNC machined and fabricated metal parts Carmelray Industrial Park I - SEZ 8% - Chinese

Bessup, Inc. Fabrication of heat transfer equipment 99.99% - Singaporean Hermosa Ecozone Industrial Park

Fabrication of pressure vessel and accessories, piping, Filinvest Technology Park Calamba GC GENTECH METAL FABRICATION INC. 100% - Filipino machining semicon parts and tooling parts - SEZ

GLOBAL MOULDING TECHNOLOGY, INC. Manufacture of snap ring plier for electronic mechanical parts 99.99% - Japanese Cavite Economic Zone GLOBAL MOULDING TECHNOLOGY, INC. Fabrication of jigs 99.99% - Japanese Cavite Economic Zone LU JUN PRECISION INDUSTRIAL CORP. Manufacture of precision metal work pieces and metal parts 100% - Taiwanese Golden Mile Business Park - SEZ MKP, INC. Manufacture of fabricated metal and aluminum parts 99.99% - Japanese Cavite Economic Zone Engage in component assembly of bill dispensing unit for THREE BRIGHT SUN DIAMOND CORPORATION 99.99% - Japanese Laguna Technopark - SEZ automated teller machines (ATM)

78% - Japanese YKY PARTS CORPORATION General fabrication and assembly of all metal or plastic parts Cavite Economic Zone 22% - Filipino

Philippine ANALYST BUSINESS October 2017 66 BUSINESS

MISCELLANEOUS MANUFACTURES

SQUAREONE MANUFACTURING 60% - Filipino Manufacture of handcrafted ceramic tiles Laguna Technopark - SEZ CORPORATION 40% - Italian

OFFSHORING AND OUTSOURCING ACCENTURE, INC. IT security and IT service management services 99.99% - Dutch Uptown Bonifacio ALORICA PHILIPPINES, INC. Call center operations 99.99% - American SM City Lipa Business process outsourcing (BPO) services and call center ARVATO CORP. 99.99% - German Northgate Cyberzone operations CATAPULT INTERNATIONAL, LLC PHIL. Software development, global support and managed services 100% - American Norkis Cyberpark BRANCH OFFICE CITIGROUP BUSINESS PROCESS SOLUTIONS IT-enabled services, encompassing call centers, data encoding, 100% - Singaporean W North PTE.LTD. transcribing and processing COGNIZANT TECHNOLOGY SOLUTIONS Customer services, by handling inbound/outbound calls, IT 99.98% - American McKinley Hill Cyberpark PHILIPPINES, INC. infrastructure services Business process outsourcing (BPO) services and call center 100% - British Virgin CONCENTRIX SERVICES CORPORATION operations Islander DIAGEO ASIA PACIFIC SHARED SERVICES Business process services (BPO) services 99.99% - Dutch McKinley West CENTRE LIMITED, INC. DIAGEO ASIA PACIFIC SHARED SERVICES Business process services (BPO) services 99.99% - Dutch Uptown Bonifacio CENTRE LIMITED, INC. DOVER BUSINESS SERVICES PHILIPPINES Business process services (BPO) services 99.99% - Dutch Cebu I.T. Park CORPORATION

Concept sketches and renderings and development drawings; 44% - Filipino DWG INK INTERNATIONAL CORPORATION CAD/REVIT drawing documents; CGI or 3D renderings; and VR 28% - Singaporean Summit One Office Tower and animation production 28% - British

96% - Australian EMAPTA VERSATILE SERVICES INC. Business process outsourcing (BPO) services using e-commerce 3% - Filipino Cyberpark 1% - Japanese ESSILOR SHARED SERVICES PHILIPPINES Software development and application services 99.96% - Dutch One Global Place INCORPORATED ESSILOR SHARED SERVICES PHILIPPINES Software development and application services 99.96% - Dutch Capella IT Center INCORPORATED FPT SOFTWARE PHILIPPINES CORP. Managed services for Helpdesk support for Customer Solutions 99.99% - Vietnamese Cebu I.T. Park Software development, web-based creative development and HARBOUR IT ASIA - PHILIPPINE BRANCH 100% - Australian E-Square I.T. Park IT administration services KNOWLES ELECTRONICS (PHILIPPINES) Business process outsourcing (BPO) services using e-commerce 99.99% - Singaporean Cebu Light Industrial Park - SEZ CORPORATION KORN FERRY FUTURESTEP (THE Business process services (BPO) services 99.99% - Singaporean BGC Corporate Center PHILIPPINES) INC. MICROSOURCING PHILIPPINES INC. Business process services (BPO) services 99.99% - Hong Kong Eastwood City Cyberpark OMEGA HEALTHCARE MANAGEMENT Business process services (BPO) services 99.99% - American Avenir SERVICES INC. PMAXGLOBAL PHILIPPINE BRANCH Business process services (BPO) services 100% - American Robinsons Galleria Cebu

60% - Filipino REST SOLUTION CORP. Call center operations Northgate Cyberzone 40% - French

RMS COLLECT PHILS. INC. Business process services (BPO) services 99.99% - American Two Sanparq Business process outsourcing (BPO) services and call center S&P GLOBAL PHILIPPINES INC. 99.99% - American 6750 Ayala Avenue Bldg. operations Business process outsourcing (BPO) services and call center S&P GLOBAL PHILIPPINES INC. 99.99% - American MSE Center operations SC RESERVATIONS (PHILIPPINES), INC. Partial transfer of operations (BPO services) 100% - American V-Corporate Centre SUPERGENE GLOBAL SERVICES, INC. BPO-digital content production outsourcing services 99.99% - Korean Robinsons-Equitable Tower SYKES ASIA INC. Call center operations 99.993% - Dutch Robinsons Galleria Cebu SYNCHRONY GLOBAL SERVICES PHILIPPINES, Call center operations 99.99% - American CBP-IT Park INC. TAKENAKA CORPORATION PHILIPPINE CAD Engage in preparation of building information modeling, 2D & 100% - Japanese The Enterprise Center CENTER 3D shopdrawing TECHLOG CENTER PHILIPPINES. Business process services (BPO) services 100% - American Lakeside Evozone TERADYNE PHILIPPINES LTD... Business process services (BPO) services 100% - American Cebu Light Industrial Park - SEZ TFI SOLUTIONS PHILIPPINES INC. Business process services (BPO) services 100% - Filipino Burgundy Corporate Tower WESERV SYSTEMS INTERNATIONAL, INC. Software development services 99.99% - Singaporean E-Square I.T. Park WESERV SYSTEMS INTERNATIONAL, INC. Software development services 99.99% - Singaporean Ecotower OTHER BUSINESS SERVICES 90% - American BEAWESOME, INC. Data encoding, transcribing and related services Ayala Business Center 10% - Filipino Manufacture of recognition/awards craft items (such as EIGHTY-EIGHT FLOOR GIFTS, INC. 99.99% - American Mactan Economic Zone II - SEZ plaques), signage, etc.

Philippine ANALYST BUSINESS October 2017 67 BUSINESS

GLOBAL 3D SYSTEMS, INC. Manufacture of 3D Printers 99.99% - American Cavite Economic Zone

TERUMO (PHILIPPINES) CORPORATION Product sterilization using ethylene oxide (EtO) 100% - Japanese Laguna Technopark - SEZ

OZ EXPORT SUPPORT SERVICES Authorization to lease from Northern Operating Services Asia, 60% - Australian Uptown Bonifacio CORPORATION Inc. a 1,966.86 sq. m. office area 40% - Filipino

SAFEWAY PHILTECH INC. Disaster recovery / business continuity office 99.99% - American Lakeside Evozone PAPER AND PAPER PRODUCTS Manufacture of offset printed laminated cartons, any and all DYNAPAC AND MALINTA (PHILIPPINES) INC. types of cartons and boxes, molded pulp products and other 99.99% - Japanese Lima Technology Center - SEZ subsidiary materials. Manufacture of heavy-duty packaging materials and other HEAVY DUTY PACKAGING CORPORATION 100% - Filipino Alviera Industrial Park container boards, papers and packaging solutions SAKURA LABELS AND PACKAGING 60% - Filipino Manufacture self-adhesive label Light Industry & Science Park III - SEZ INCORPORATED 40% - Chinese REAL ESTATE ANFD PROPERTY DEVELOPMENT

80% - Filipino Cavite Technopark-Special Economic AJUL ECOZONE PROPERTIES CORP. Registration of its additional warehouse building 20% - Chinese Zone

98% - Singaporean Maintaining and operating the newly constructed 12 units AMPLEFIELD DEVELOPMENT, INC. 1.2% - Malaysian Lima Technology Center - SEZ warehouse/factory buildings 1% - Filipino

Registration of its additional warehouse facility (Atlantica ATLANTICA INDUSTRIAL RESOURCES CORP. 100% - Filipino Cavite Economic Zone Building 6) Operation of 2 office/BPO towers: Central Bloc 1 and Central CENTRAL BLOCK DEVELOPERS, INC. 100% - Filipino Cebu I.T. Park Bloc 2 Towers CONTAINERBOARD AND PACKAGING Operating and maintaining an existing 3-warehouse buildingg 100% - Filipino Laguna Technopark - SEZ COMPANY INC.. FIRST PHILEC, INC. Operating an existing factory/warehouse building 100% - Filipino First Philippine Industrial Park - SEZ

Golden Gate Business Park-Cavite JEPPAMAN BUILDERS CORPORATION Establish and operate a factory/warehouse building 100% - Filipino Export Processing Zone

Calamba Premiere International ORO PRIME MERIDIAN VENTURES INC. Construct a factory/warehouse building 100% - Filipino Park - SEZ Establishing a 4-storey office building to be known as Typing TYPING MEDIA INC. 99.99% - Hong Kong Baguio City Economic Zone Media Inc. Building RECYCLING AND WASTE MANAGEMENT Engage in collecting, buying and sorting of used battery and 80% - Filipino ECO GREEN RISING PHILS. CORP. Suntrust Ecotown Tanza other precious and non-ferrous metal scraps 20% - Korean RUBBER AND PLASTIC PRODUCTS AIYOH INDUSTRIES PHILIPPINES, INC. Manufacture and assembly of Plastic Injection Molding Products 99.99% - Japanese Lima Technology Center - SEZ Manufacture of die-cutting, packaging, expanded polyfoam, ARMSTRONG WESTON ASIA INC. printing & manufacturing of all kinds of foam, plastic, rubber, 99.99% - Singaporean Light Industry & Science Park III - SEZ and adhesives materials CLOVERPACK CORPORATION Manufacture of packaging materials and other related products 100% - Filipino Victoria Wave - SEZ

Manufacture and assembly of brushes, plastic parts and other MYBRUSH TECHNOLOGY (PHIL.) INC. 99.99% - Malaysian First Philippine Industrial Park - SEZ parts for vacuum cleaners and home appliances

STANDARD UNITS SUPPLY PHILIPPINES Engage in injection molding production, snets (switch box) 99.99% - Japanese First Philippine Industrial Park - SEZ CORPORATION. assembly and creation of CAD drawing / designs

TEMA DESIGN PHILIPPINES INC. Manufacture and export of decorative items, props, etc. 99.76% - Danish Pampanga Economic Zone Filinvest Technology Park Calamba TACCA PHILIPPINES INC. Manufacture of extruded plastic part/sheets 99.98% - Australian - SEZ STORAGE AND WAREHOUSING AIYOH INDUSTRIES PHILIPPINES, INC.. Logistic services 99.99% - Japanese Lima Technology Center - SEZ Calamba Premiere International CLAYMOUNT ASSEMBLIES PHILIPPINES, INC.. Warehousing and logistics services 99.99% - Dutch Park - SEZ DRAKA PHILIPPINES, INCORPORATED. Warehousing and logistics services 99.99% - Dutch Mactan Economic Zone II - SEZ Filinvest Technology Park Calamba JINGYE MANUFACTURING PHILS., INC.. Warehousing and logistics services 100% - Chinese - SEZ KOSAKA PHILIPPINES CORPORATION Warehousing and logistics services 99.99% - Japanese Cavite Economic Zone NIPPON PULSE TEC PHILIPPINES INC.. Warehousing / logistics support services 99.99% - Japanese Cavite Economic Zone Warehousing, inventory management, direct sale, resale, NTW PHILIPPINES, INC. 99.99% - Japanese Laguna Technopark - SEZ consignment services 50% - Taiwanese Import electronic consumables/supplies for temporary storage 42% - Japanese RENKYO INDUSTRIAL (PHILIPPINES) INC.. Laguna Technopark - SEZ and distribution 6% - Filipino 2% - Chinese SUNPOWER PHILIPPINES MANUFACTURING Warehousing and logistics services 100% - Caymanian Laguna Technopark - SEZ LTD.

Philippine ANALYST BUSINESS October 2017 68 BUSINESS

FOREIGN DIRECT INVESTMENT BUSINESS CLIMATE INDEX Balance of Payments Concept*; JANUARY-JUNE 2017 LEVEL (US$ million) FDI: BOP CONCEPT YEAR-AGO YEAR-ON-YEAR CURRENT US$ Million LEVEL (% CHANGE) 1200 TOTAL FDI 3,597.7 4,183.5 (14.0) 1000

140.9 1,448.0 (90.3) 800 600 Reinvested Earnings 416.4 382.1 9.0 400 Debt instruments 3,040.4 2,353.5 29.2 200 0 * The BSP adopted the Balance of Payment, 6th edition (BPM6) compilation framework effective 22 March 2013 with the release of the full-year 2012 and revised 2011 BOP statistics. In BPM6, net -200 FDI flows refer to non-residents’ equity capital (i.e., placements less withdrawals) + reinvestment of earnings + debt instruments, net (i.e.,net intercompany borrowings). -400 -600 YEAR- INDUSTRIAL PERFORMANCE DATA YEAR-TO- J'14 M M J S N J'15 M M ON-YEAR (2000=100) AUGUST 2017 (INDEX) DATE GROWTH Volume of Production Index (VoPI) MOTOR VEHICLE SALES 2017 145.9 2.8 -2.7 (2000=100) AUGUST 2017 YEAR-AGO GROWTH RATE a. Food 164.2 26.3 6.7 CURRENT LEVEL (%) b. Beverage 133.3 4.8 -4.3 MOTOR VEHICLE SALES 35,309 32,472 8.7 c. Tobacco 7.1 -18.4 -4.1 PASSENGER CAR SALES 11,258 11,136 1.1 d. Textile 28.6 -24.7 -26.7 COMMERCIAL VEHICLE SALES 24,051 21,336 12.7 e. Footwear and Wearing Apparel 21.3 -22.1 -18.8 f. Wood and Wood Products 64.7 2.3 7.4 UNIVERSAL AND COMMERCIAL BANK'S -JUNE 2017 g. Furniture & Fixtures 917.6 35.6 43.9 LOANS OUTSTANDING TO THE REAL ESTATE SECTOR (P Bn) h. Basic Metals 221.0 28.5 30.3 % to Total % to Total Jun-17 Jun-16 i. Iron and Steel 156.7 20.1 33.8 RE loan RE loan

j. Non-ferrous Metals 371.8 38.0 23.4 Residential 338.21 24.7 279.46 24.6

k. Fabricated Metal Products 481.9 89.5 68.9 Commercial 1031.94 75.3 858.59 75.4 l. Machinery Excluding Electrical 59.8 -3.4 -1.9 m. Electrical Machinery 118.4 16.8 5.0 n. Transport Equipment 189.2 18.6 19.0 o. Other Mfg Industries 90.5 -12.4 -7.5 p. Paper & Paper Products 82.4 12.1 1.4 q. Publishing & Printing 186.3 41.6 8.0 r. Leather Products 1.0 22.4 18.2 s. Rubber Products 273.3 -6.0 2.6 t. Chemical Products 170.8 -48.4 -50.4 u. Petroleum Products 53.1 1.3 9.8 v. Non-Metallic Mineral Products 165.5 18.7 17.1 w. Glass & Glass Products 140.1 24.7 27.9 x. Cement 239.8 32.3 29.9 y. Misc. Non-Metalic Mineral Products 49.8 -2.3 -5.0 VALUE OF PRODUCTION INDEX (VAPI) 193.8 2.4 -3.4 (2000=100) AVERAGE CAPACITY UTILIZATION 83.8 -16.3 83.7

Philippine ANALYST BUSINESS October 2017 69 BUSINESS BUSINESS CLIMATE INDEX STRIKES IN AUGUST 2017 LABOR STRIKES (SEPTEMBER 2017) Two work stoppages were recorded in August. Meanwhile, there were a total of 147 notices of strike/lockouts handled during the period. STRIKES DECLARED WORKERS INVOLVED MAN-DAYS LOST (000)

2017 2016 2017 2016 2017 2016 JAN - - - - 120,348 - FEB 1 - 214 - 14,488 - MAR 1 - 138 - 16,668 - APR 3 - 430 - 16,276 - STRIKES DECLARED MAY 1 2 263 433 18,040 82,884 3.5 JUN - 1 - 217 15,738 1,519 3 JUL 1 2 294 146 13,346 14,146 2.5 AUG 2 1 140 92 9,278 844

2 SEP - 2 - 45 10,894 675 OCT - 2 - 184 - 11,136 1.5 NOV - 3 - 134 - 3,578 1 DEC - 2 - 1,855 - 1,855 0.5 TOTAL 9 15 1,479 3,106 235,076 116,637

0 J'13 A J O J'14 A J O J'15 A J O VISITOR ARRIVALS IN JUNE 2017 -0.5 Total visitor arrivals registered in June is 474,854, up by 3.42% from 459,138 in the same month in 2016. Of this, 2.55% or 12,125 visitors were Filipinos residing abroad. Korea remained the top source of market followed by the U.S. and the China. Visitors coming from Korea amounted to 108,455 (22.84% share of the total visitors in June). The U.S. market tallied 84,676 visitors (17.83%) while the Chinese market recorded 66,066 visitors (13.91%). MAN-DAYS LOST 1400

1200

1000

800

600

400

200

0 J'13 A J O J'14 A J O J'15 A J O -200

-400

VISITOR ARRIVALS: JANUARY-AUGUST 2017 SURVEY ON MONTHLY OCCUPANCY RATE & LENGTH OF STAY COUNTRY 2017 2016 % CHANGE RANK JAN TO DEC JAN TO DEC GROWTH RATE KOREA 1,069,089 976,499 9.48 1 2015 2014 2015/2014 USA 660,875 584,149 13.13 2 De Luxe Hotels CHINA 641,412 484,567 32.37 3 Occupancy Rates 71.60 71.11 0.69 JAPAN 405,571 367,144 10.47 4 Length of Stay 2.71 2.74 -0.79 TAIWAN 167,461 157,517 6.31 5 First Class Hotels AUSTRALIA 166,993 161,016 3.71 6 Occupancy Rates 59.09 58.83 0.44 CANADA 134,459 114,074 17.87 7 Length of Stay 2.19 2.14 2.42 UNITED KINGDOM 125,008 117,535 6.36 8 Standard Hotels SINGAPORE 111,468 120,241 -7.30 9 Occupancy Rates 62.51 63.96 -2.27 MALAYSIA 95,179 95,129 0.05 10 Length of Stay 2.42 2.52 -3.81 HONGKONG 74,489 81,332 -8.41 11 Economy Hotels INDIA 72,381 60,091 20.45 12 Occupancy Rates 60.14 59.73 0.69 OVERSEAS FILIPINO 102,772 143,972 -28.62 Length of Stay 1.57 1.65 -4.85 OTHERS 643,723 578,783 11.22

TOTAL 4,472,897 4,044,065 10.60 OVERALL AVERAGE 66.95 67.21 -0.39

Philippine ANALYST BUSINESS October 2017