Bangsamoro Peace Deal to Attract More Investments in Mindanao

BUSINESSBUBUSINESSSINESS 31

Bangsamoro peace deal to attract more investments in Mindanao The signing of the peace deal promises lasting peace in the region and is expected to foster inclusive growth by attracting investments that will generate more jobs and livelihood.

redit rating fi rm Moody’s said that the signing of the Comprehensive Agreement on the Bangsamoro (CAB) Cis a “credit positive” for the Philippines noting that Bangsamoro has a greater chance of success than previous attempts given its greater fi scal autonomy. Moody’s projects that the peace deal will allow for the development of different industries especially agri-business given the region’s vast tracts of arable land estimated at 34,000 square kilometers. Bangsamoro hosts the 2 biggest irrigation systems (Kabulnan and Maridagao- Malitubog) in Mindanao capable of supporting 45,000 hectares of farms. In terms of power supply, it hosts the National Power Corporation’s Agus River Power Complex which is the major source of electricity (730 megawatts) for the Mindanao grid. According to the ARMM Business Council (ARMM-BC), the region has vast potential for palm oil, rubber, coconut, and hopes that investments will further increase as the region gains aquaculture, fi sheries and many other agri-business activities. more confi dence from investors. In 2013, Iron Blaze, a Malaysian It is ideal for businesses to position themselves early in the oil company invested P90 million for the construction of an oil Bangsamoro economy considering that there is still no signifi cant depot in Maguindanao. La Frutera, a banana exporting fi rm also market competition. The Department of Trade and Industry located in Maguindanao, spent P300 million for the expansion is eyeing to meet global demand for rubber so it is currently of its 1,000 hectare plantation farm to 1,300 hectares. Recently, developing the rubber industry in the region. ARMM has 30,000 Al Mujahidun Agro Resources and Development, Inc. signed an hectares of fertile land for rubber and is among the country’s top agreement with the provincial government of Maguindanao to producers. Oil palm farming and coconut plantations are also convert the 2009 Ampatuan massacre site into a 1,500 hectare gaining ground in the region with 12,550 hectares identifi ed for banana plantation farm that could employ at least 2,000 residents. plantation. ARMM is also home to rich fi shing grounds and is Furthermore, the government considers the Bangsamoro the top source of up to 70% of the country’s seaweed production. as a unique investment hub because of its Islamic roots. In 2013, the ARMM-Regional Board of Investments said that According to ARMM-BC, Bangsamoro is strategically placed actual investments in the region rose from P569 million in 2012 to for various ventures under the Brunei, Indonesia, Malaysia, and P1.5 billion in 2013. It generated about 2,000 jobs. ARMM-BOI Philippines-East ASEAN Growth Area. These areas share the attributed the signifi cant increase to the Bangsamoro peace process same culture and could easily link with each other. The growing

Philippine ANALYST March 2014 32 BUSINESS

It is ideal for businesses to position themselves early in the Bangsamoro economy considering that there is still no signifi cant market competition.

global industry for “halal” food and lifestyle products — ones HOG MEAT PRODUCTION, 2003-2013 that meet Islamic law standards of manufacture – is a huge (IN ‘000 METRIC TONS) opportunity for investors. Banks that offers Islamic banking 2,100 and fi nance will also be needed as Islamic religion does not 2,000 allow Muslims to access fi nancial support based on interest. Meanwhile, the Bangsamoro Development Agency has 1,900 just started formulating a 6-year Bangsamoro Development Plan (2014 – 2019) which identifi es necessary investments and 1,800 programs to promote inclusive growth in the region. The BDP is 1,700 funded by a grant from the Mindanao Trust Fund administered by the World Bank. It is composed of 2 phases. The 1st phase 1,600

(2014-2015), the Transitional Development Plan, will lay the 1,500 direction for existing and immediate programs starting this year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 until 2016 to ensure the smooth transition of the Bangsamoro. Source: Bureau of Agricultural Statistics. The 2nd phase (2016-2019), the Medium-Term Development Plan, will focus on strategic interventions and investments that HOG INVENTORY,2000-2013 promote inclusive growth to ensure security, stability and job (NUMBER OF HOGS RAISED IN FARMS) creation. The BDP is expected to be completed by end-May. 14,500 14,000 13,500 13,000 Local hog industry must ﬁ rm up for AEC 2015 12,500 12,000 The local hog industry needs to prepare itself for the 11,500 incoming Association of Southeast Asian Nation (ASEAN) 11,000 economic community 2015 as trade liberalization could 10,500 disrupt domestic competitiveness. 10,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

The livestock industry, which includes swine production, Note: In 2008, yellow corn wholesale and retail prices surged by almost 15%, the peak price is an important part of Philippine agriculture, comprising growth since 1991. 11% of the sector and growing by 1.8% in 2013 amidst other Source: Bureau of Agricultural Statistics agricultural industries contracting. Hog meat production, in particular, has been increasing by 2% annually for the past decade, with 2 million metric tons (MT) produced in 2013 highlighted ways to bolster competitiveness of the hog industry. compared to 1.7 million MT in 2003 (see chart). Most local One of its points is the importance of innovations that enhance hog raisers cater to the local market compared to food grains the efﬁ ciency of meat production. Since new technologies are such as rice which are normally exported. Hog imports in 2013 provided by multinational companies, the government must create amounted to 185,000 MT, while exports only reached 2,000 MT. a better investment climate and relax certain economic policies. Pork imports in the country have already doubled since Additionally, the government must impose policies that 2010 when the common effective preferential tariff on goods, facilitate the availability of needed feed ingredients to help lower including meat products, was gradually relaxed from 5% to domestic feed prices. In this case, the Philippine government 0% in line with the AEC. The national government has not must take advantage of the AEC to support the import of provided any AEC-related incentives to the hog industry ingredients such as corn, which is a highly protected product. while other ASEAN governments provided subsidies to help The SEARCA study also pointed out the underinvestment their domestic producers compete regionally. Philippine hog of the government in livestock research since the 1990s raisers have had to compete with increased subsidized imports. and the scarcity of ﬁ nance intermediation for the industry. Competitiveness of the local industry is further affected by For their part, local hog producers choose to remain optimistic unfavorable input price changes. A 2008 increase in the price about ASEAN free trade. The Philippine Association of the Meat of corn, an essential ingredient in hog feed, caused some local Processors (PAMPI) said that pork production in the country can farms to close, resulting in a dip in the inventory and production compete with increasing ASEAN imports because of Filipinos’ (see chart). With trade liberalizing and prices rising, the pressure preference for fresh meat, with wet markets present everywhere in on the local hog industry to remain competitive has heightened. the country. The PAMPI added, “Our spirit of ‘Think Filipino and In one of its studies, the Southeast Asian Regional Center Buy Filipino’ will carry us through against the highly subsidized for Graduate Study and Research in Agriculture (SEARCA) agricultural commodities of our neighboring countries.” Philippine ANALYST March 2014 BUSINESS 33

The government must facilitate the transfer of meat production technologies domestically by making a better investment climate and relaxing certain economic and trade policies.

MINING, OIL, & GAS Other indices in the survey include the Best Practices Mineral Potential Index (BPMPI), Investment Attractiveness Index (IAI) and Current Practices Mineral Potential Index (CPMPI). The study seeks to identify the provinces, states, PH has world’s 3rd worst mining policy and countries that have the most attractive environment that regime encourages mining investments based on 15 factors (see box). The country ranked 6th in the BPMPI. The index rates a According to Fraser Institute’s 2013 Annual Survey of country’s geological attractiveness regardless of its mining Mining and Exploration Companies, the Philippines has policies. The maximum score possible on this index is 1 and the the 3rd worst mining policy regime. The survey measured Philippines got 0.79. The 3rd index, IAI, is constructed by combing how resource endowments and government policies affect the PPI (40% weight) and BPMPI (60%) scores. The maximum score possible on this index is 100. The Philippines scored mining investments. It involved 690 respondents from 51.4 (61st). The ﬁ nal index, CPMPI is based on respondents’ different exploration, development, and other mining-related answers to a question about whether or not a jurisdiction’s companies around the world. mineral potential under the current policy environment encourages or discourages investments. The highest score is The Philippines ranked 110th out of 112 countries in the 1. Western Australia topped with the score of 0.73, Ecuador survey’s Policy Perception Index (PPI) which measures the at the bottom scoring 0.05 while the Philippines 0.23 at 86th. attractiveness of a country’s mining policies. It is standardized Aside from these indices, respondents were asked how public to a maximum score of 100 with the Philippines only scoring opposition to mining affects the approval process of projects 9.5. Joining the country in the bottom 3 are Venezuela (6.5) they are directly involved. Over 36% agreed it had affected their and Kyrgyzstan (5.3). No nation scored perfectly in the index approval process delaying it by 1 to 4 years. Respondents said the however Sweden had the highest score of 95.2 along with Finland opposition was mainly caused by 2 reasons: (1) environmental (94.3) and Alberta (93.4). For the past 5 years, the Philippines or water usage and (2) indigenous or aboriginal rights or title. has remained at the bottom of the PPI ranking (see table).

PH PPI RANKINGS (2009-2013)

2009 2010 2011 2012 2013

70/72 66/79 88/93 88/96 110/112

THE SURVEY QUESTIONNAIRE WAS BASED ON THE FOLLOWING FACTORS:

1. Uncertainty concerning enforcement of regulations in general 2. Uncertainty concerning environmental regulations 3. Regulatory duplication and in consistencies 4. Legal system 5. Taxation regime 6. Uncertainty concerning disputed land claims 7. Uncertainty concerning what areas will be protected as wilderness, parks, or archeological sites, etc. 8. Infrastructure 9. Socioeconomic agreements / community development conditions 10. Trade barriers 11. Political stability 12. Labor regulations 13. Quality of geological database 14. Level of security 15. Availability of labor/skills

It’s an impossible system and provides no security for foreign investment.

Philippine ANALYST March 2014 34 BUSINESS

Lastly, the survey noted that the Philippines has tougher competition from other ASEAN countries in non-voice the most room for improvement in terms of mining services and customer care services using non-English languages. policies. The Philippines mining licensing conditions was Among the Philippines’ top BPO rivals in the Southeast Asian described as a “take-it-or-leave-it basis” while mining region are Malaysia and Vietnam, each having 2 cities in the communities were described as very “demanding” (see box). 2014 Tholons’ Top 100 Outsourcing Destinations list (see table). Malaysia specializes in aerospace engineering services and provides technical support to companies in the United I.T. UPDATE States, European Union and Asia. Malaysia is also investing in its multi-lingual and multi-ethnic workforce that would enable it to attract BPO investors from Great Britain, China, India, PH-BPO industry faces competition in Thailand and Japan. Meanwhile, Vietnam has built a niche on ASEAN community animation, software information processing and gaming. French and Russian are extensively taught in high schools and colleges and can be tapped by the Vietnamese BPO sector in the future. The business process outsourcing (BPO) industry will Despite these developments, the Information Technology continue to play a crucial role in the Philippines’ economic and Business Processing Association of the Philippines (IBPAP) growth over the medium term. But the industry can be assured that the country will be able to maintain its position expected to face tougher competition from emerging BPO as a regional and global hub for IT-BPO services. The IBPAP markets in the Southeast Asian region in the longer term. said that they are proactively undertaking initiatives that will further improve the industry. Among these initiatives is the Over the next 5 years, the BPO industry is expected to grow Next Wave Cities program which aims to develop globally by 20% annually and outpace remittances as the country’s biggest preferred outsourcing destinations outside Metro Manila. The source of dollar infl ows. In 2013, export earnings from the IT-BPO initial goal of the IBPAP is to add 3 more Philippine cities to sector grew by 15% to $13.3 billion. It is expected to reach $15.3 the Tholons’ Top 100 Outsourcing Destinations (see table). billion this year and rise to $25 billion in 2016 (see chart). By 2016, Among the current advantages of the Philippines as a BPO the industry is projected to account for a tenth of the gross domestic hub are its low labor cost, strong English profi ciency and strong product from the current 4.6% (see chart). The BPO sector is also affi nity with the Western culture. However, the Philippines should expected to create 120,000 new jobs annually for the next 3 years. now start building niches in new and fast-growing outsourced The sector is projected to employ 1.2 million workers by 2016. services to better position itself for future growth and long-term However, the industry’s long-run growth will depend primarily sustainability amidst the heightened competition in the ASEAN on its ability to outperform its Southeast Asian competitors. In region. Possible niche areas include fi nance and accounting 2008, the ASEAN ICT ministers agreed to jointly promote the services, software engineering, and other higher value services region as a BPO destination, although a concrete framework or knowledge process outsourcing (KPO). The country’s BPO has yet to be fi nalized for the ASEAN BPO industry. Under the sector must also tap other non-English markets such as Korean, ASEAN economic community to be established in 2015, BPO Mandarin, Cantonese, and Spanish as these markets expand. companies currently operating solely in the Philippines can expand The development of information technology infrastructure or transfer to other Southeast Asian countries with equal treatment. and locations around the country and creation of a department According to an Oxford Business Group report, the Philippines that would support the local ICT-BPO sector (DICT) are also is well-positioned in English-extensive services but it could face necessary to encourage more BPO investments into the country.

IT-BPO EXPORT REVENUE SHARE (IN $B) .0 IT-BPO Export Revenue (in Billion dollars) .0

30 .0 25 .0 20

15 .0 10 .0 5

0 .0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2016 2006 2007 2008 2009 2010 2011 2012 2013 2016

Note: 2014 and 2016 data are projections Sources: GDP data from World Bank, export revenue data from BSP, 2016 data from IBPAP Source: Bangko Sentral ng Pilipinas, IBPAP

Philippine ANALYST March 2014 BUSINESS 35

Over the next 5 years, the BPO industry is expected to grow by 20% annually and trounce remittances as the country’s biggest source of dollar infl ows.

SE ASIAN COUNTRIES IN THE 2014 THOLON’S TOP 100 OUTSOURCING DESTINATIONS 2014 RANK 2013 RANK COUNTRY CITY 2 3 Philippines Manila (NCR) 8 8 Philippines Cebu City 17 16 Vietnam Ho Chi Minh City 18 19 Malaysia Kuala Lumpur 22 23 Vietnam Hanoi 30 31 Singapore Singapore 58 61 Indonesia Jakarta 67 73 Malaysia Penang 69 70 Philippines Davao City 82 84 Philippines Sta. Rosa, Laguna 85 83 Thailand Bangkok 93 94 Philippines Bacolod City 95 93 Philippines Iloilo City 99 99 Philippines Baguio City

Source: Tholons Capital

Philippine ANALYST March 2014 36 BUSINESS

PEZA APPROVED PROJECTS FOURTH QUARTER 2013 EQUITY INDUSTRY ACTIVITY ZONE LOCAL/FOREIGN APPAREL AND TEXTILE MANUFACTURES Engage in embroidery and printing of all kinds of garments and/or FEEDER APPAREL CORPORATION Mactan Economic Zone wearing apparel Manufacture of non-woven fabrics and the fabrication of machines for 80% - Filipino N E C MANUFACTURING INC. Cavite Economic Zone the production of nano fabrics/textiles 20% - Korean

AUTOMOTIVE TRADE

ISUZU AUTOPARTS MFG. CORPORATION Aluminum die casting of transmission case/cover Laguna Technopark - SEZ

Manufacturer of Engine Metal parts for all automotive engine and Mactan Economic Zone PHILIPPINE IINO CORPORATION general purpose equipment II - SEZ Manufacture of casings for automotive parts and components such as 60% - Filipino First Cavite Industrial PRECISE PARTS COOPERATION (PPCI) INC. wipers and motor components 40% - Japanese Estate - SEZ

SOUHATSU CEBU MANUFACTURING, INC. Manufacture of Door Cables Mactan Economic Zone

TOYOTA AUTOPARTS PHILIPPINES, INC. Manufacture of 614K Transmission Assembly Units Toyota Sta. Rosa - SEZ Automotive wire harness assembly for car models: Mitsubishi EK Wagon Lima Technology Center YTP-LIMA MANUFACTURING, INC. 4F45 and Mitsubishi Toppo - SEZ ELECTRONICS Carmelray Industrial Park ACBEL POLYTECH PHILIPPINES, INC. Assembly and test of Lithium-ion battery pack II - SEZ ASTEC POWER PHILIPPINES, INC. Manufacture of Grid-Tie Solar Inverter Power Supply Laguna Technopark - SEZ

ASTEC POWER PHILIPPINES, INC. Manufacture of Variable Speed Driver Platform for Climate Control Laguna Technopark - SEZ

Design and Manufacture of Switching Power Supplies speciﬁ c to DELL ASTEC POWER PHILIPPINES, INC. Laguna Technopark - SEZ requirement ASTEC POWER PHILIPPINES, INC. Design and Manufacture of 30Kw High Power Rack Power Supply Laguna Technopark - SEZ Manufacture of Compact Switching Transformer for Smart Phones and ASTEC POWER PHILIPPINES, INC. Cavite Economic Zone Tablets Light Industry & Science DX ANTENNA PHILIPPINES, INC. Oroduction of wireless intercom Park I - SEZ Assembly, testing, inspection of Actuator Pivot Flexible Printed Circuit EMS COMPONENTS ASSEMBLY, INC. Laguna Technopark - SEZ (APFPC) GLOBAL ENGINERY TECHNICIANS, INC. Manufacture and assembly of energy saving products Victoria Wave - SEZ

HARADA AUTOMOTIVE ANTENNA (PHILIPPINES), Manufacture and assembly of Advance Technology Automotive Antennas First Cavite Industrial INC. and other accessories for export Estate - SEZ ICHINOMIYA ELECTRONICS PHILIPPINES Terminal Assembly project Laguna Technopark - SEZ CORPORATION Assembly of Electronic Toll Collection System in Vehicle Detection and INTEGRATED MICROELECTRONICS, INC. Laguna Technopark - SEZ Wireless Toll System

NIKKOSHI ELECTRONICS PHILIPPINES, INC. Manufacture of Shutter Coil Laguna Technopark - SEZ

Carmelray Industrial Park OPTOWAVE MANUFACTURING PHILIPPINES INC. Manufacture of Cosmos Holder, TCosmos Yoke, Base and Bobbin 99.8% - Korean II - SEZ PANASONIC PRECISION DEVICES PHILIPPINES Manufacture of Ferrite Devices such as Sheet Antenna, Ferrite Sheet and Carmelray Industrial Park CORPORATION Contactless Charger Ferrite Module II - SEZ PANASONIC PRECISION DEVICES PHILIPPINES Manufacture of BD OPU and OPU with traverse Laguna Technopark - SEZ CORPORATION Processing/assembly of Printed Circuit Boards (PCB), electronic and PRECISION MICROCIRCUITS, INC. Mactan Economic Zone electro-mechanical parts or devices Carmelray Industrial Park TDK PHILIPPINES CORPORATION Camera VCM (Voice Coil Motor) for Smart Phone project II - SEZ TOSHIBA INFORMATION EQUIPMENT (PHILIPPINES), Production of External Drive" Laguna Technopark - SEZ INC.

TOSHIBA INFORMATION EQUIPMENT (PHILIPPINES), Repair/Upgrading and Warranty Services of Toshiba Solid State Drive Carmelray Industrial Park INC. (FRC Activity) I - SEZ 99.99% - Laguna Technopark Annex TTI LAGUNA PHILIPPINES INC. Production of Flexible Flat Cable Indonesian - SEZ YEONHO ELECTRONICS MANUFACTURING First Cavite Industrial Manufacture of Connector Assembly PHILIPPINES, INC. Estate - SEZ

LED lighting ﬁ xtures, LED lights with lighting ﬁ xtures and others with First Cavite Industrial YUMEX PHILIPPINES CORPORATION LED components Estate - SEZ

Philippine ANALYST March 2014 BUSINESS 37

FOOD AND BEVERAGE MANUFACTURES

PHILIPPINE HAOFENG FOOD CORPORATION 90% - Canadian Lima Technology Center (Formerly: Cocostar Import and Export Processing and Canning of Mushroom and Fruits, and Mushroom Growing 10% - Filipino - SEZ Corporation)

John Hay Special Tourism ROCKY MOUNTAIN ARABICA COFFEE COMPANY INC. Processing of Arabica coffee Economic Zone

VUQO, INC. Manufacture of Playboy Premium Vodka Victoria Wave - SEZ

HOTEL, RESTAURANT, AND LEISURE SERVICES

Sheraton Manila Hotel project, including facilities integral to the Newport City CyberTourism LUCKY STAR HOTELS AND RECREATION INC. 100% - Filipino project, such as food and beverage outlets and recreational facilities Zone Tourist-oriented accommodations, including facilities integral to the Newport City CyberTourism TRAVELLERS INTERNATIONAL HOTEL GROUP, INC. project such as food and beverage outlet, retail stores and recreational Zone facilities (Maxims II) IT AND IT-ENABLES SERVICES

Graphic design services and outsourcing business, including document UP Science and Technology AFFINITY EXPRESS PHILIPPINES, INC. creation, vector artwork, image editing, embroidery digitizing, Park (North) advertisement layout and design for variable data printing

FIFTH LEG DATA PRODUCTION INC. IT and IT-enabled services, particularly data mining and analysis services 99.99% - British 6788 Ayala Avenue Bldg.

Research, design, development and testing of prototypes of electronic FISHER-ROSEMOUNT SYSTEMS, INC. - PHILIPPINE power conversion products for use by the global industrial automation Eastwood City Cyberpark BRANCH sector in such industries as manufacturing, process control, material handling and service automation project

Production and input auxiliary of presentation materials and working 99.86% - Japanese LUX CORPORATION CAD drawings; building estimation and scale modeling; and other Trafalgar Plaza 0.14% - Filipino related services

Center Design and Testing of Instrument Clusters and other auto parts PHILIPPINE AUTO COMPONENTS, INC.. Northgate Cyberzone for Original Equipment Manufacturer (OEM) car assemblers project

MACHINERY AND EQUIPMENT

Assembly/Fabrication, installation and maintenance of Innovative 82% - Japanese First Cavite Industrial GLOBAL ECO-LIGHTING SOLUTION INC. Lighting System and Fixtures; and Assembly/Fabrication of various steel 18% - Filipino Estate - SEZ structures including installation and its maintenance

Manufacture of magnetic ballasts, electronic ballasts, transformers, ignitors, compact fl uorescent lamp, LED lamps, LED drivers, and other Carmelray Industrial Park MAY & CHRISTE PHILIPPINES INC. lighting fi xtures for fl uorescent lamps, high pressure discharge lamps, II - SEZ halogen lamps, LED lamps and other special lamps, including testing of all kinds of lighting devices

NIKKOSHI PHILIPPINES CORPORATION Core Assembly Laguna Technopark - SEZ

Manufacture of geared motor, motor base, coffee mill, welding motor, First Philippine Industrial TSUKASA ELECTRIC PHILIPPINES INC. 99.99% - Japanese gear pump, linear motion unit, special motor, check valve and gear Park - SEZ

METAL INDUSTRIES

Manufacture of steel products such as steel blocks for press die and Carmelray Industrial Park AJUSTEEL MANILA MFG. INC. construction materials including round, angular, and H-shape steel pipes 99.99% - Korean II - SEZ and all kinds of related products and merchandise

92% - Taiwanese Carmelray Industrial Park ASAM INDUSTRIES INC. Engage in treatment and coating of metals 8% - Chinese I - SEZ

Manufacturing of Sandwich Presses and Toasters, and its component First Philippine Industrial B/E AEROSPACE B.V. - PHIL. BRANCH parts for installation Park - SEZ

CALAMBA SHINEI INDUSTRY PHILIPPINES Manufacture, assembly and processing of Ultra Super Slim & Ultra Slim Calamba Premiere CORPORATION parts & components for “eBooks” computer International Park - SEZ

DAWSON CREEK INDUSTRIAL CORP. Manufacture of steel coils 100% - Filipino Mactan Economic Zone

Assembly of molds and jigs, repair of machine used in the production of FORTUNECROSS PHILIPPINES, INC. Cavite Economic Zone shaft, screws

Manufacture of metal and stone storage items and/or combination of GLOBAL ENGINERY TECHNICIANS, INC. Victoria Wave - SEZ metal and stone and other similar activities

98% - Japanese Filinvest Technology Park ITAKURA PARTS PHILIPPINES CORPORATION Manufacture of stainless and other steel parts and metal components 2% - Filipino Calamba - SEZ

MANILA AMC MACHINERY, CORPORATION Manufacture of hydraulic ﬁ ttings 99.99% - Japanese Laguna Technopark - SEZ Lima Technology Center MECTRON PHILIPPINES, INC. Metal processing (Auto parts and Machine parts) 99.99% - Japanese - SEZ 60% - Filipino NIHON TRIM INDUSTRIES PHILS., INC. Repair, maintenance and reconstruction of mold of plastic products Laguna Technopark - SEZ 40% - Japanese

Philippine ANALYST March 2014 38 BUSINESS

Mactan Economic Zone NITTO METAL INDUSTRY CEBU INC. Manufacture of metal and non-metal plastic products 99.8% - Japanese II - SEZ PHILIPPINE ASSOCIATED SMELTING & REFINING Increase in production capacity of PASAR’s manufacture of copper Leyte Industrial CORPORATION (PASAR) cathodes/anode, silver/gold dore, sulfuric acid and other by-products Development Estate - SEZ

SAMPO MOLDING AND ASSEMBLY INDUSTRY CORP. Calamba Premiere Processing of Tool and Dies for Ofﬁ ce and Industrial Printer International Park - SEZ 99.99% - First Philippine Industrial SHIMANO (PHILIPPINES) INC. Manufacture and production of bicycle front chain wheels Singaporean Park - SEZ

SHOWA CREATE CEBU INC. Manufacture and export of ﬂ at springs and other metal objects 99.98% - Japanese Mactan Economic Zone

First Cavite Industrial SUMINAC PHILIPPINES, INC. Production of hydraulic/power cylinder Estate - SEZ 80% - Chinese Production and assembly of injection parts for ofﬁ ce and information Carmelray Industrial Park TECHNO MOLDPLAS (PHILS.), INC. 10% - Japanese equipment II - SEZ 10% - Filipino

TUBOTECH PLUMBING PRODUCTS PHILIPPINES Laguna International Manufacture/assembly of healthcare and wellness products CORPORATION Industrial Park - SEZ

MISCELLANEOUS MANUFACTURES

CEBU SHIN KOWA, INC. Manufacture of Xenon Tubes 99.98% - Japanese Mactan Economic Zone

Develop, manufacture, ﬁ nish and repair paddlecraft and accessories EPIC KAYAKS CEBU, INC. 99.99% - American Mactan Economic Zone such as kayaks and paddleboards

Re-engineering of production processes of its existing registered projects/operations for the manufacture of terminal printers, printer Lima Technology Center EPSON PRECISION (PHILIPPINES), INC. components, quality checking and inspection of terminal printer parts - SEZ and design and fabrication of moulds and press metal dies. Lima Technology Center FUNAI ELECTRIC PHILIPPINES INC. Manufacture/assembly of inkjet printer 99.8% - Japanese - SEZ

Manufacture, assembly and wholesale of precision watches made of NAKAYAMA SEIMITSU MANUFACTURING INC. 99.87% - Chinese Cavite Economic Zone metal, plastic or other materials

SAMSUNG ELECTRO-MECHANICS PHILIPPINES Calamba Premiere Manufacture of ultra-high chip capacitor CORPORATION International Park - SEZ

Manufacture of Self-Contained Breathing Apparatus/Gas Mask/Fire First Philippine Industrial SANCHEONG PHILIPPINES, INC. 100% - Korean Fighter Helmet/Protective Garment/Firehood/Bag Park - SEZ

OFFSHORING AND OUTSOURCING SERVICES

ACCENTURE, INC. Business Process Outsourcing McKinley Hill Cyberpark

Business Process Outsourcing (BPO) with co-location arrangement with ACCENTURE, INC. McKinley Hill Cyberpark Diageo UK

75% - Indian ACCESS HEALTHCARE SERVICES MANILA, INC. Call center and BPO services McKinley Hill Cyberpark 25% - Filipino

AGR OPERATIONS MANILA, INC. Business process outsourcing and IT-enabled services 99.99% - American Asian Star Building

AIG SHARED SERVICES - BUSINESS PROCESSING, Business processes outsourcing (BPO) services Gateway Tower INC. AIG SHARED SERVICES - BUSINESS PROCESSING, The Paragon Corporate Business processes outsourcing (BPO) services INC. Centre

94% - Swiss ALERE PHILIPPINES, INC. Call center operations 4% - Filipino W Fifth Avenue 2% - American

Inbound and outbound call center management services, specifi cally to ALORICA PHILIPPINES, INC. Cebu I.T. Park take-over the operations of Alorica Pacifi c Rim Inc. Inbound and outbound call center management services, specifi cally to ALORICA PHILIPPINES, INC. SM City Lipa take-over the operations of Alorica Pacifi c Rim Inc.

Managed IT Facility for the BPO/Call Center Operations of Startek ANTHEM SOLUTIONS, INC. eNTEC Building Philippines, Inc.

ANTHEM SOLUTIONS, INC. Call Center operations of Convey Health Solutions Philippines, Inc. Robinsons CyberPark

Managed IT Facility for the Call Center Operations of Startek ANTHEM SOLUTIONS, INC. eNTEC Building Philippines, Inc. (SPI)

ANTHEM SOLUTIONS, INC. Lease of its facility to Alere Philippines, Inc. W Fifth Avenue

Offer facility and support services for the IT-enabled contact center ANTHEM SOLUTIONS, INC. Diliman I.T. Bldg. service operations of AFNI Philippines, Inc. BEIJING ADAM INTERNATIONAL - PHILIPPINE Business Process Outsourcing; and online teaching/tutorial 100% - Chinese Burgundy Corporate Tower BRANCH

CONVERGYS PHILIPPINES SERVICES CORPORATION Call center operations Eastwood City Cyberpark

CONVERGYS PHILIPPINES SERVICES CORPORATION Additional 300 seats/workstations Cebu I.T. Park

Philippine ANALYST March 2014 BUSINESS 39

UP Science and Technology CONVERGYS PHILIPPINES SERVICES CORPORATION Call center operations Park (North)

CONVERGYS PHILIPPINES SERVICES CORPORATION Call center operations Abreeza Corporate Center

CONVEY HEALTH SOLUTIONS PHILIPPINES, INC. Call center operations 99.99% - Dutch Robinsons CyberPark

CWT PHILIPPINES, INC. IT Management, Support and Monitoring 99.99% - Dutch Zuellig Building 99.99% - DATACOM IT SYSTEMS (PHIL) INC. Business process outsourcing and call center services Eastwood City Cyberpark Malaysian DE JANEIRO GLOBAL SOLUTIONS BPO INC. Business process outsourcing (call center) The Enterprise Center

DYNAQUEST TECHNOLOGY SERVICES INC. IT Outsourcing (ITO) and Business Process Outsourcing (BPO) 99.99% - American 6750 Ayala Avenue Bldg.

Software Development, IT Consultancy, and System Integration with 50% - British ELISHA TELECOM GROUP INCORPORATED Eastwood City Cyberpark focus on Open Source Internet Telephony 50% - Filipino

EXIST SOFTWARE LABS, INC. Software development services Cebu I.T. Park

FIRSTSOURCE SOLUTIONS LIMITED Call center operations Cebu I.T. Park

BPO - Providing engineering solution in Mechanical and Piping Modeling 99.99% - Multinational FYFE CORPORATION and Design, Civil and Structural Design and Drafting, and various Australian Bancorporation Centre Drafting Solutions

GEMALTO TECHNOLOGIES INC. IT R&D services software and application development 99.99% - Dutch Philamlife I.T. Tower

99.95% - St. GLOBAL OUTSOURCING SERVICES PHILIPPINES Software development, website support, and customer service contact Vincent and E-Square I.T. Park INC. center for website support Grenadines

GLOBAL ZEAL, INC. Software Development using Node.JS (a new Javascript) 99.99% - American JESA Building

HARBOUR IT ASIA - PHILIPPINE BRANCH Technical Support and Software Development 100% - Australian UnionBank Plaza

HINDUJA GLOBAL SOLUTIONS LIMITED Call Center and BPO services Northgate Cyberzone

IBM BUSINESS SERVICES, INC. Business Transformation Outsourcing (BTO) services Naga City Technology Park UP Science and Technology IBM SOLUTIONS DELIVERY, INC. IT Application Management Park (North) INFINIT-O LEGAZPI INC. Business Process Outsourcing (BPO) services 99.99% - Chinese Embarcadero de Legazpi

LENDSOFT SOLUTIONS, INC. Software development and e-business solutions 99.99% - British One Corporate Centre

MEDICALL PHILIPPINES, INC. Business process outsourcing (call center operation) Cebu I.T. Park

Knowledge process outsourcing, conceptualization and overall management of print publications and digital/multimedia products NEW LEAF MULTIMEDIA OUTSOURCING INC. 100% - Filipino King’s Court IT Center and solutions; market research; and creation, management and maintenance of e-commerce platforms 80% - Filipino NEXOID CORPORATION Software development and other related services BPI Buendia Center 20% - Australian Knowledge process outsourcing services/business process outsourcing OMEGA HEALTHCARE MANAGEMENT SERVICES INC. 99.99% - American UnionBank Plaza services in the healthcare sector The Rockwell Business REALPAGE (PHILIPPINES) INC. Call center operations Center

Programming a new application; Modify existing application, support RICOH IMAGING PRODUCTS (PHILIPPINES) software packages; Network conﬁ guration and support; and Voice 100% - Japanese Mactan Economic Zone CORPORATION communication conﬁ guration and support

SOFTWARE CELLULAR NETWORK LIMITED – Call center operations 100% - British I-Square Building PHILIPPINE BRANCH

SOUND CONNECTION PHILS INC. Business process outsourcing and call center services 99.88% - American JY Square I.T. Center

STARTEK PHILIPPINES, INC. Call center operations eNTEC Building STREAM INTERNATIONAL GLOBAL SERVICES Call center business JMALL IT Center PHILIPPINES, INC. SYNNEX-CONCENTRIX CORPORATION ICT-enabled services Eastwood City Cyberpark

TATA CONSULTANCY SERVICES (PHILIPPINES) INC. Information Technology (IT) and Business Process Outsourcing services eNTEC Building

Alphaland Southgate TELEPHILIPPINES INCORPORATED Offer the lease of its facility Towers TELEPHILIPPINES INCORPORATED Call center operations CBP-IT Park The Annex-SM City Davao TELEPHILIPPINES INCORPORATED Additional call center facility IT Center TELETECH CUSTOMER CARE MANAGEMENT Business Process Outsourcing / Call Center Operations Aseana One PHILIPPINES, INC.

TELETECH CUSTOMER CARE MANAGEMENT Business Process Outsourcing / Call Center Operations SM iCITY 2 PHILIPPINES, INC.

Philippine ANALYST March 2014 40 BUSINESS

TRANSCOM WORLDWIDE (PHILIPPINES), INC. Increase in the service capacity of its call center/BPO services activity Transcom Center

Software, systems, applications and solutions development, 99.99% - British VIRTUSA PHILIPPINES, INC. McKinley Hill Cyberpark maintenance, integration and related IT support services Virgin Islander

Responsive Web Design, Web Development, Multilingual Website Mobile 60% - Filipino WEB OUTSOURCING GATEWAY INC. Apps Development, SEO Website Maintenance, project Management and One Corporate Centre 40% - Japanese Administration

WEST CONTACT SERVICES, INC. Call center operations ExportBank Plaza Building

Call centers, data encoding, transcribing and processing, directories, WIPRO BPO PHILIPPINES LTD. INC. GAGFA IT Center etc., and business process out-sourcing e-commerce

WNS GLOBAL SERVICES PHILIPPINES, INC. Business process outsourcing and call center services Eastwood City Cyberpark

OTHER SERVICES

INTEGRATED PACKAGING LOGISTICS Carmelray Industrial Park Digital printing / cutting MANUFACTURING, INC. II - SEZ

PAPER AND PAPER PRODUCTS Production of individual carton boxes (ICB) used as specialized packaging, as well as other related packaging materials such as First Philippine Industrial KANEPACKAGE PHILIPPINE, INC. corrugated cushions, molded cushions, slip/top sheets, tray, sleeves, Park - SEZ accessory pads, Danpla box and partitions, etc. PETROLEUM PRODUCTS

Manufacturing and processing of lubricants, oils, sprays, ﬂ uids, agents, LUBCON LUBRICANTS ASIA PACIFIC INC. solvents, greases, pastes, powders, dispersions, suspensions, emulsions 99.99% - German Laguna Technopark - SEZ and other related formulations as well as production of solid oil

REAL ESTATE AND PROPERTY DEVELOPMENT

BIGLIFT PROPERTIES AND DEVELOPMENT Hermosa Ecozone Construct three (3) factory/warehouse buildings 100% - Filipino CORPORATION Industrial Park Filinvest Technology Park GC GENTECH CORPORATION Construct a warehouse-type building 100% - Filipino Calamba - SEZ HEAVYGOLD, INC. Construct a factory/warehouse building 100% - Filipino Mactan Economic Zone

Lease out 605-square meters of its building space to Cebu Fukushin, KH CEBU CORPORATION Inc., and another 300-square meters of its building space to FX Ninety Mactan Economic Zone Eight Corporation Light Industry & Science MESCO PROPERTY PROVIDERS, INC. Construct two (2) factory buildings 100% - Filipino Park III - SEZ Hermosa Ecozone ORIENT GOLDCREST REALTY, INC. Construction and management of six (6) units warehouse buildings Industrial Park Construction and management of eighteen (18) units warehouse ORIENT GOLDCREST REALTY, INC. Suntrust Ecotown Tanza buildings

99% - Korean PARK APPAREL, INC. Operate and manage its existing factory/warehouse building Cavite Economic Zone 1% - Filipino

SOUTH WIN, INC. Additional warehouse facility Laguna Technopark - SEZ

RECYCLING

Recycling, sorting, dismantling, cleaning of scrap materials as per 68% - Japanese ASIAN GLOBAL BIO-METAL, INC. MRI Ecozone - SEZ speciﬁ cation, and packing 32% - Filipino

Manufacture, remanufacture, testing, repair, assembly and export of RENEWABLE PRODUCTS GROUP, INC. Laguna Technopark - SEZ various mobile phones and related products and accessories

RUBBER AND PLASTIC PRODUCTS 99.99% - IK PLASTIC COMPOUND PHILS. INC. Manufacture of plastic and plastic coloring compound Laguna Technopark - SEZ Singaporean

Manufacture, assembly, and processing of all kinds of industrial plastic First Cavite Industrial NANO SMART MATERIAL PHILIPPINES, INC. sheet, plastic bag with lamination, foam, pallet and recycled resin Estate - SEZ

Greenﬁ eld Automotive NISSHO PRECISION PHILIPPINES, INCORPORATED Production of fabricating ﬁ lm 99.99% - Japanese Park - SEZ

Manufacture of plastic parts for industrial machines assembly and Lima Technology Center OB KOGYO (PHILIPPINES) INC. 99.98% - Chinese production - SEZ

Light Industry & Science PRIMEPACK TECHNOLOGIES, INC. Injected parts & plastics packaging products/injection molding Park II - SEZ

Manufacture of rubber products such as grommets, connector caps, People's Technology SEIEN RUBBER PHILIPPINES, INC. rubber rings, rubber mounts, plug cups and silicon sheets Complex - SEZ

STORAGE AND WAREHOUSING Carmelray Industrial Park BELTONTOTOKU PHILIPPINES, INC. Warehousing/logistics activities 99.99% - Japanese II - SEZ

Philippine ANALYST March 2014 BUSINESS 41

First Philippine Industrial CHOEI PLASTIC WORLD PHILIPPINES INC.. Warehousing/logistics support services of neutral plastic materials 99.98% - Chinese Park - SEZ Warehousing and logisctics support services of steel/plastic molded DAITOH PRECISIONS, INCORPORATED 99.99% - Japanese Mactan Economic Zone products Carmelray Industrial Park ELIESEL PHILIPPINES, INC. Warehousing/logistics activities 99.99% - Korean II - SEZ Warehousing/logistics support services of various automotive parts and First Cavite Industrial MITSUBA PHILIPPINES CORP. 99.99% - Japanese related products Estate - SEZ

Importation of raw materials and semi-ﬁ nished goods and importation of 97% - Japanese NIHON DENKEI PHILIPPINES, INC. testing and measuring equipment for warehousing and/or simple process Laguna Technopark - SEZ 3% - Filipino at the warehouse facility

Warehousing/logistics services of specialized steel which is a material 99.99% - Hong PARTS PHILIPPINES, INC. used for the production of spindle motors for hard disk drives of Cavite Economic Zone Kong computers

WOOD AND CORK PRODUCTS

HOUSE TECHNOLOGY INDUSTRIES PTE. LTD. Wood powder processing Cavite Economic Zone II

Philippine ANALYST March 2014 42 BUSINESS

LIST OF BOI-REGISTERED PROJECTS FEBUARY 2014 PROJECT COST EQUITY INDUSTRY ACTIVITY (IN PHP MILLION) LOCAL/FOREIGN AGRICULTURE, FISHERY, AND FORESTRY 99.99% Foreign Delinanas Development Corporation Producer of Cavendish Banana 765 (Dutch, Costa Rican, Honduran, American) 67% Filipino Anﬂ o Banana Corporation Producer of Cavendish Banana 347 33% British Virgin Island SL Agritech Corporation Producer of Milled (Hybrid) Rice 490 100% Filipino

Univanich Carmen Palm Oil Corporation Producer of Crude Palm Oil and by-products 465 N/A

APPAREL AND TEXTILE MANUFACTURES

Quizat Garments Manufacturing Producer of Made-up Articles of Textiles such as Knitted Blankets 0.3 100% Filipino AUTOMOTIVE TRADE 40% Chinese Mitsukoshi Motors Phils. Inc. Manufacture of Motorcycles and parts (chassis/frame) 211 60% Filipino ELECTRICITY, WATER, AND GAS Renewable Energy Developer of 49.4 MW Nasulo Geothermal Power 76% Filipino Energy Development Corporation 4,632 Plant under Renewable Energy Act of 2008 (RA 9513) 24% Foreign

Operator of District Cooling System in Abreeza Mall, JP Laurel St., Davao 60% Filipino Philippine Integrated Energy Solutions, Inc. 354 City 40% Japanese 60% Filipino Philippine Integrated Energy Solutions, Inc. Operator of District Cooling System in Ayala Center Cebu 830 40% Japanese 60% Filipino Philippine Integrated Energy Solutions, Inc. Operator of District Cooling System in Centrio Mall Cagayan DE Oro 333 40% Japanese Renewable Energy Developer of 8 MW Catuiran Hydroelectric Power Catuiran Hydropower Corporation 2,000 100% Filipino Plant OFFSHORING AND OUTSOURCING 85% Filipino Philweb Corporation Knowledge-Based Services (Software Development) 497 15% Foreign OTHER BUSINESS SERVICES 60% Filipino Philippine Helmet Testing Center, Inc. Helmet Testing Center under Research and Development 13 40% Foreign REAL ESTATE AND PROPERTY DEVELOPMENT

Communities Tarlac, Inc. Developer of Low Cost Mass Housing (Camella Tarlac Phase 3) 198 100%Filipino

Developer of Low-Cost Mass Housing Project under the Preferred List – Phinma Property Holdings Corporation 949 100% Filipino Mass Housing (HACIENDA BALAI) 97% Filipino SM Development Corporation Developer of Low Cost Mass Housing Project (Grace Residences Tower 3) 1,396 3% Foreign Developer of Low-Cost Mass Housing Project under the Preferred List – Horizon Land Property Dev't. Corp. 220 100% Filipino Mass Housing (Peninsula Garden Midtown Homes – Mandarin Tower)

Energy City Philippines Holdings, Inc. Terminal Facility - LNG Storage and Regasiﬁ cation Facility 45,646 100% Foreign

TRANSPORT SERVICES

Operator of Air Transport Services under the Preferred Activity- 76% Filipino Cebu Air, Inc. Infrastructure- Transport with the Acquisition of One (1) Aircraft (A320 2,008 24% Foreign #31 with CAB Registration No. RP-C3277 and MSN 5934) Domestic/Inter-island Shipping Operator under Infrastructure – Water SMC Shipping and Lighterage Corporation 204 100% Filipino Transport (2nd Hand, 2002 Built Cargo Vessel – MV SL VENUS 8)

TOTAL 61,558

Philippine ANALYST March 2014 BUSINESS 43

BUSINESS CLIMATE INDEX

FOREIGN DIRECT INVESTMENT FDI:BOP CONCEPT Balance of Payments Concept*; JANUAR - DECEMBER 2013 US$ Million 000 LEVEL (US$ million) 500 YEAR-ON-YEAR SOURCE CURRENT YEAR AGO % CHANGE 000 TOTAL FDI 3,860 3,215 20.05 500 Equity Capital 663.66 2,006.09 -66.92 000 Reivested Earnings 700.73 818.73 -14.41 500 Debt Instruments 2,495.58 390.6 538.91 0

* The BSP adopted the Balance of Payment, 6th edition (BPM6) compilation framework effective 22 500 March 2013 with the release of the full-year 2012 and revised 2011 BOP statistics. In BPM6, net 000 FDI ﬂ ows refer to non-residents’ equity capital (i.e., placements less withdrawals) + reinvestment of earnings + debt instruments, net (i.e.,net intercompany borrowings).

YEAR-ON- YEAR-TO- INDUSTRIAL PERFORMANCE DATA YEAR DATE (2000=100) JANUARY 2014 INDEX GROWTH GROWTH MOTOR VEHICLE SALES FEBRUARY 2014 VOLUME OF PRODUCTION INDEX (VOPI) 107.2 7.3 -6.6 YEAR-AGO GROWTH RATE (2000=100) DATA LEVEL (%) a. Food 142.9 3.0 3.9 MOTOR VEHICLE SALES 16,828 14,429 16.5 b. Beverage 106.4 -0.7 4.2 PASSENGER CAR SALES 5,620 4,618 21.7 c. Tobacco 3.3 65.0 -52.2 COMMERCIAL VEHICLE SALES 11,208 9,821 14.1 d. Textile 36.3 31.5 10.6 e. Footwear and Wearing Apparel 27.1 -25.3 -20.8 f. Wood and Wood Products 54.0 6.9 -16.2 UNIVERSAL AND COMMERCIAL BANK’S g. Furniture & Fixtures 923.4 237.4 29.9 LOANS OUTSTANDING TO THE REAL ESTATE SECTOR (P Bn) SEPTEMBER 2013 h. Basic Metals 84.6 -23.9 -29.0 % TO TOTAL % TO TOTAL SEP-2013 SEP-2012 i. Iron and Steel 95.8 13.0 0.7 RE: LOAN RE: LOAN j. Non-ferrous Metals 72.3 -59.6 -59.9 RESIDENTIAL 188.88 30 142.56 33 k. Fabricated Metal Products 233.4 23.8 10.0 COMMERCIAL 438.52 70 286.3 67 l. Machinery Excluding Electrical 36.5 44.8 6.2 m. Electrical Machinery 87.5 13.0 0.3 n. Transport Equipment 117.1 0.8 0.2 o. Other Mfg Industries 86.2 -26.7 -20.0 p. Paper & Paper Products 63.9 -8.8 -5.9 q. Publishing & Printing 57.9 52.4 21.1 r. Leather Products 4.2 23.5 12.0 s. Rubber Products 249.6 16.7 6.6 t. Chemical Products 134.7 15.7 -48.9 u. Petroleum Products 55.9 3.9 17.0 v. Non-Metallic Mineral Products 148.1 11.2 -3.0 w. Glass & Glass Products 137.6 -11.8 -4.8 x. Cement 147.9 -4.6 -5.7 y. Misc. Non-Metalic Mineral 152.9 86.2 3.8 Products VALUE OF PRODUCTION INDEX (VAPI) 164.4 15.7 -48.9 (2000=100) AVERAGE CAPACITY UTILIZATION 84.5 -15.5 84.5

Philippine ANALYST March 2014 44 BUSINESS

BUSINESS CLIMATE INDEX 1 STRIKE IN JUNE LABOR STRIKES

A strike was recorded in June 2013 which involved 400 workers equivalent to 1,200 STRIKES DECLARED WORKERS INVOLVED MAN-DAYS LOST (000) man-days lost. Meanwhile, there is a total of 104 notices of strike/lockouts since January. In 2012, 3 strikes were recorded involving 209 workers, which is equivalent to 2013 2012 2013 2012 2013 2013 797 man-days lost. Meanwhile, 184 notices of strike were ﬁ led that year. JAN 0 0 - - - - FEB ------MAR ------STRIKES DECLARED APR ------MAY ------12 JUN 1.00 - 400 - 1,200 - 10 JUL - 1.00 - 20 - 160 AUG ------8 SEP ------6 OCT - 2.00 - 189 - 637 NOV ------4 DEC ------2 TOTAL 1 3 400 209 1,200 797

0 VISITOR ARRIVALS UP BY 5% IN JANUARY Total visitor arrivals registered in January is 461,383 up by 5.80% from 436,079 in 2013. Of this total, 3.64% or 15,870 visitors are Filipinos residing abroad. Korea remained the top source market in 2013 followed by the U.S. and China. Visitors coming from Korea amounted to 118,308 (25.64% share). The U.S. market placed 2nd with 71,042 visitors (15.40%) while the Chinese market ranked 3rd with 49,538 visitors (10.74%). MAN-DAYS LOST 4000 HOTEL OCCUPANCY DECREASES TO 67% IN 2012 In 2012, average occupancy rate of hotels decreased to 67.25% from 69.26% in 2011. De 3500 Luxe hotels posted the highest occupancy rate with 71.49%, down by 0.93 percentage 3000 point from 2011. Standard hotels registered the 2nd highest occupancy rate at 64.82%, which also slipped by 3.48 percentage points. Meanwhile, First Class hotels outranked 2500 economy hotels with an average occupancy rate of 58.04%, lower by 4.1 percentage points. Economy hotels had the least occupancy at an average rate of 53.44%, down by 2000 5.14 percentage points in 2011.

1500

1000 TOURISM ARRIVALS 500 500

0 400

300

200

100 VISITOR ARRIVALS JANUARY 2014 0 COUNTRY 2014 2013 % CHANGE RANK KOREA 118,308 134,994 -12.36 1 USA 71,042 65,709 8.12 2 SURVEY ON THE MONTHLY OCCUPANCY RATES & LENGTH OF STAY CHINA 49,538 24,952 98.53 3 JAPAN 35,160 34,553 1.76 4 2012 2011 2012/2011 AUSTRALIA 20,747 19,549 6.13 5 JAN-DEC JAN-DEC GROWTH RATE CANADA 16,413 14,660 11.96 6 De Luxe Hotels SINGAPORE 13,399 12,130 10.46 7 Occupancy Rates 71.49 72.36 -1.20 TAIWAN 12,448 16,170 -23.02 8 Length of Stay 2.92 3.02 -3.28 HONGKONG 11,587 8,310 39.43 9 First Class Hotels UNITED KINGDOM 11,098 9,854 12.62 10 Occupancy Rates 58.05 61.04 -4.88 MALAYSIA 8,697 10,232 -15.00 11 Length of Stay 2.30 2.46 -6.70 GERMANY 7,616 6,389 19.20 12 Standard Hotels OVERSEAS FILIPINO 15,790 15,870 -0.50 Occupancy Rates 64.82 66.87 -3.06 OTHERS 69,540 62,707 10.90 Length of Stay 2.38 2.35 1.06 TOTAL 463,397 438,092 5.78 Economy Hotels Occupancy Rates 53.44 59.22 -9.76 Length of Stay 2.13 1.92 11.18

Philippine ANALYST March 2014