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PH no more the ‘sick man of Asia’

Philippine Daily Inquirer, 30 January 2015
By Ben O. de Vera and Amy R. Remo
 
Posting an economic growth of 6.1 percent last year, the Philippines is no longer the “sick man of Asia,” the country’s chief economist said on Thursday.

“Overall, the Philippine economy’s performance in 2014 and the preceding years starting in 2010 shows how our country can no longer be called the ‘sick man’ of Asia,” said Socioeconomic Planning Secretary Arsenio Balisacan.

The economic growth in 2014 marked the second consecutive year the country posted the fastest rate in the region after China.

“Our economic growth is becoming more competitive with our East and Southeast Asian neighbors. We have avoided the dreaded boom-and-bust cycle that has hounded our economy for decades,” said Balisacan, also director general of the National Economic and Development Authority (Neda).

In his presentation at the 5th Ayala-UP School of Economics Economic Forum, he said the country’s growth rate of 6.3 percent in 2010-2014 was the highest five-year average during the past 40 years.

In the fourth quarter, the economy grew by 6.9 percent, better than the 6.3 percent in the same period in 2013.

The Philippines’ fourth-quarter gross domestic product (GDP) expansion was the third highest in the region, after China’s 7.3 percent and Vietnam’s 7 percent.

The fourth-quarter GDP growth was the fastest quarterly figure in 2014—the economy grew 5.7 percent in the first quarter, 6.4 percent in the second and 5.3 percent in the third.

State spending up

Balisacan told reporters that during the fourth quarter, the government made strides in addressing anemic government spending on public goods and services, which had slowed growth in the previous quarters.

Government consumption grew 9.8 percent in the fourth quarter, a reversal of the 0.4-percent decline in the same quarter in 2013 and of the 2.6-percent drop in the third quarter, Philippine Statistics Authority (PSA) data showed.

In a statement, the Department of Budget and Management attributed the increase in public expenditures in the fourth quarter to “effective” use of government agencies’ cash allocations, on top of the “timely” release of employees’ bonuses, including yearend bonuses and productivity enhancement incentives.

DAP ruling’s effect

Public spending slowed last year mainly due to the “chilling effects” of the Supreme Court decision that stopped the flow of more money through the controversial Disbursement Acceleration Program (DAP). Government agencies had also been more careful in their disbursements amid a more watchful eye of the Commission on Audit.

The Neda chief said the full-year GDP target for 2014 was not met mainly due to the sluggishness of government spending for the most part of the year. For the entire 2014, government consumption rose a mere 1.8 percent, lower than the 7.7-percent increase in 2013.

But “the worst is over” as far as the problem on underspending is concerned, Balisacan said.

“We have learned our lesson. We have identified the nature of the problem. The glitches in the previous quarters have been resolved, although not completely; some work remains in progress,” he said. “We made catch up in the fourth quarter; not all is lost.”

The effects of the uptick in government spending during the fourth quarter would spill over to this year, the Neda chief said. “The funds obligated in the last quarter of 2014 will impact on the economy, to be felt in the first half of the year. We expect a robust performance of the government sector in the first two quarters,” he said.

The government reported on Thursday that the GDP expanded by 6.1 percent in 2014—lower than the 7.2-percent growth posted in 2013 as well as below the 6.5-7.5 percent goal earlier set by the Development Budget Coordination Committee or DBCC.

The GDP growth last year was, nonetheless, within the 6-7 percent range, which Balisacan and Budget Secretary Florencio Abad had said was more “realistic” to be achieved.

The services sector contributed 3.4 percentage points or over half of last year’s growth, while the industry and agriculture sectors chipped in 2.5 percentage points and 0.2 percentage point, respectively, PSA data showed.

BPO, other growth drivers

Balisacan told a press conference that the growth drivers in services were business process outsourcing (BPO), real estate and renting, among other business activities.

In terms of year-on-year growth, the industry sector posted the highest expansion of 7.5 percent in 2014 and 9.2 percent during the fourth quarter.

“[T]he acceleration in industry growth was due to the double-digit expansion in construction, even as manufacturing remained as its biggest growth driver,” Balisacan said.

Despite missing last year’s target, Balisacan said the Philippines remained one of the fastest-growing economies in the region last year, posting a full-year GDP growth just behind China’s 7.4 percent.

In the October to December period, the services sector was likewise the biggest contributor to growth with a share of 3.3 percentage points. Industry contributed 3.1 percentage points, while agriculture had a share of 0.5 percentage point.

The sustained growth averaging over 6 percent during the past few years showed that the country was “maintaining the trajectory toward the path of high growth,” Balisacan said.

More jobs

Sustaining robust growth over a long period of time would bring about an economy that attracts more investments and generate more jobs to ultimately slash poverty, according to the Neda chief.

At the Ayala-UPSE forum, Balisacan said the government “should be spending more” to place the deficit at 2 percent of the GDP.

In the fourth quarter, government consumption contributed only 0.8 percentage point to the GDP growth. Robust consumer spending amid strong flows of remittances from Filipinos overseas and an improving economy in general allowed household consumption to account for 3.7 percentage points or over half of the GDP growth in the last three months.

Sustainable

Despite potential external shocks to be posed by the downward trend in global oil prices as well as a still fragile world economy, the Philippines’ growth target of 7-8 percent for 2015 is “sustainable and achievable,” Balisacan said.

Other economic managers lauded the 2014 growth figures.

“Our improved growth in the last quarter of 2014 is a testament to the soundness of the Aquino administration’s fiscal management strategy … News like this is certainly a good way to begin the new fiscal year, with expenditures making a positive showing in the last three months of 2014,” Abad said.

For Finance Secretary Cesar Purisima, last year’s fourth quarter and full-year growth “resoundingly affirm that the Philippine economy is on an upward growth trajectory buoyed by strong macroeconomic fundamentals.”

Peter Perfecto, executive director of the Makati Business Club, said the group was “pleased” with the economy’s performance in 2014.

“Given that the growth is broad-based, featuring expansion in the three major sectors, we believe that this lays the foundations for more robust growth this year, especially in the first quarter. With our hosting of the Asia-Pacific Economic Cooperation meetings, the expected increase in public and private construction … will be able to greatly assist in attaining our year-end goal of around 7 percent,” he said.

PPPs to drive construction

“Furthermore, the most expensive public-private partnership (PPP) projects, such as the airports, subway and the Cavite-Laguna Expressway, will be bid out and some even awarded this year, which will drive up construction activities again,” he added.

Edgardo Lacson, Employers’ Confederation of the Philippines (Ecop) president, said the economy would further grow in 2015 due to accelerated infrastructure spending, low oil prices and renewed mining activity.

He said the start of election spending in the fourth quarter, resolution of the port congestion problem in Manila and a stable foreign exchange rate could further fuel economic expansion.

“For 2015, I see major drivers being improvement in infrastructure (ports, airports and roads), power availability, peace and order (the SAF massacre may be detrimental to the ongoing peace talks), stable peso, favorable business climate and political positioning for 2016 elections,” said Dan Lachica, head of Semiconductor and Electronics Industries in the Philippines Inc.
 

DPWH postpones bid deadline for CLLEx Phase 1 by one week

Business World, 29 January 2015
By Chrisee Jalyssa V. Dela Paz
 
BID SUBMISSIONS for the P14.93-billion first phase of the Central Luzon Link Expressway (CLLEx) Project has been moved to Feb. 9 to give the Public Works and Highways department time to respond to concerns raised by prospective bidders.

The P14.93-billion deal to construct a 30.7-kilometer four-lane expressway connecting Tarlac and Cabanatuan cities had an original bid submission date of Feb. 2, but the Department of Public Works and Highways (DPWH) extended by seven more days to “respond to additional clarification or queries raised by prospective contractors or bidders,” according to a statement from the department on Thursday.

“This is to preclude any issue that may arise later during the procurement process,” DPWH Secretary Rogelio L. Singson said in the statement.

“We have to address all the issues or concerns being raised, otherwise, these may again be the causes of the delay in project implementation,” he added.

A notice of postponement issued by the DPWH Bids and Awards Committee for Civil Works Vice-Chairman and Bureau of Construction Director Walter R. Ocampo showed that the department is “extending to 2:00 p.m. of February 9, 2015 the bid submission period.”

The first phase of the CLLEx project is funded by a loan agreement between the governments of the Philippines and Japan under the Japan International Cooperation Agency) Loan Agreement.

The second phase, which runs 23 kilometers, will be implemented under the public-private partnership (PPP) program including the operations and maintenance of the entire 53-km CLLEx stretch. It will cost P14.20 billion.

CLLEx forms an east-west link for an overall High Standard Highway network within a 200-kilometer radius of Metro Manila.

The proposed expressway will start at the end of the Subic-Clark-Tarlac Expressway and link with the Tarlac-Pangasinan-La Union Expressway.

The DPWH has also extended the deadline of submission of prequalification documents for the government’s biggest PPP project rolled out thus far to Feb. 27 at the request of prospective bidders.

Prequalification documents for the P122.8-billion Laguna Lakeshore Expressway Dike project has been moved to Feb. 27 from Jan. 14, after parties preparing bids said the project is too big and they need more time to prepare their documents and strategies.

The Laguna Lakeshore Expressway Dike project involves a 47-kilometer flood control dike, on top of which will be a six-lane expressway from Taguig City to Los Baños, budgeted for about P64.914 billion; and the reclamation of 700 hectares west of the expressway-dike for about P57.897 billion, creating opportunities for developing new business and residential areas on reclaimed land.

The 24 groups that bought bid documents are:

Rainbow Holdings, Inc.; Mega Express Road and Development Corp.; Aboitiz Equity Ventures, Inc.; Ayala Land, Inc.; Metro Pacific Tollways Corp.; Muhibbah Engineering Bhd of Malaysia; JV Power and Wealth Corp.; Megaworld Corp.; Minerales Industrias Corp.; GT Capital Holdings, Inc.; Leighton Contractors of Australia; Egis Projects SA of France; LT Group, Inc.; the D.M. Wenceslao Group’s Laguna Lakeshore Consortium; Filinvest Land, Inc.; Macquarie Securities (Phil), Inc.; San Miguel Corp.; Megawide Construction Corp.; JG Summit Holdings, Inc.; PT Star Line of Indonesia; State Properties Corp.; Alloy MTD-Hashin-Vista Quezon City of Malaysia; VINCI Concessions of France; and IL & FS Transportation Networks Ltd. of India.

Overall, nine PPP projects have been awarded so far by the Aquino government since late 2010.
 

Mactan Cebu Airport to receive $75m loan from ADB for expansion

Airport Technology, 29 January 2015

The Asian Development Bank (ADB) has announced the approval of a $75m loan to Mactan Cebu Airport in the Philippines.

The loan is being given for the expansion and renovation of the airport, which is expected to boost passenger traffic and support inclusive growth.

As a result, it has become the first large-scale public-private partnership (PPP) project awarded by the government.

The financing includes debt of PHP20bn ($450m) from a consortium consisting of BDO Unibank, Bank of the Philippine Islands, Philippine National Bank, Land Bank of the Philippines, Metropolitan Bank & Trust Company and Development Bank of the Philippines.

Cebu is one of the major economic centres of the country and the Mactan Cebu Airport is designed serve up to 4.5 million passengers, but in 2014 it served more than seven million travellers, which is more than its capacity it could handle.

The expansion project is expected to include renovation of the existing passenger terminal, construction of new commercial facilities and construction of a new passenger terminal.

The passenger capacity for the new and existing terminal after the completion of the project is expected to be 12.5 million a year.

The project is likely to be developed under a 25-year concession agreement, which will include operation of both terminals and commercial outlets.

ADB Private Sector Operations Department investment specialist Christine Genalin Uy said: “ADB’s involvement demonstrates its commitment to assist the government in developing critical infrastructure, the lack of which has been hampering new investments in the country.

“The project will increase tourism, and support industry and agricultural activity, thus creating employment opportunities in the province of Cebu and its neighbouring provinces.”
 

Funding for Mactan airport project OKd

Philippine Daily Inquirer, 28 January 2015
By Paolo G. Montecillo

MANILA-based Asian Development Bank (ADB), the region’s biggest aid provider, has thrown its support behind the upgrading of the Mactan Cebu International Airport (MCIA), enforcing the legitimacy of the project that was hounded by controversies early on.

In a statement, ADB said it had approved a $75-million loan for the expansion and renovation of MCIA to boost passenger traffic at the country’s second-largest airport.

The project is expected to support inclusive growth in the Visayas region, the ADB said. Upgrades for MCIA is the first large scale public-private partnership (PPP) project awarded by the Aquino administration.

The financing for the project also includes debt of P20 billion ($450 million) from a consortium of Philippine banks composed of BDO Unibank Inc.; Bank of the Philippine Islands; Development Bank of the Philippines; Land Bank of the Philippines; Metropolitan Bank & Trust Co. and Philippine National Bank.

“ADB’s involvement demonstrates its commitment to assist the (Philippine) government in developing critical infrastructure, the lack of which has been hampering new investments in the country,” said Christine Genalin Uy, investment specialist in ADB’s Private Sector Operations Department.

“The project will increase tourism, and support industry and agricultural activity, thus creating employment opportunities in the province of Cebu and its neighboring provinces,” she said.

Cebu is among the fastest growing regions in the Philippines and a major contributor to the country’s economy. It is the gateway to the Visayas but the existing airport in Mactan can no longer cope with the surge in passenger numbers.

Mactan Cebu Airport, which opened in the 1960s, was designed to serve up to 4.5 million passengers a year but in 2014 it served more than 7 million.

The project—which aims to deliver high-quality airport terminal operations in line with international standards—will include the construction of a new passenger terminal and renovation of the existing one, as well as providing new commercial facilities.

Passenger capacities at the new terminal and upgraded one will reach 12.5 million each year. The project will be developed under a 25-year concession agreement for the operation of both terminals and commercial outlets.

The loan from ADB and cofinancing from the consortium of private banks will be provided to GMR Megawide Cebu Airport Corporation, a consortium of India’s GMR Infrastructure Ltd and Philippine construction firm, Megawide Construction Corp., which won the bidding for the expansion and upgrade of the airport.

India’s GMR Infrastructure is the fourth largest private airport operator in the world, while Megawide is recognized as a local leader in the use of cutting edge construction technology.

The chief rival bidder for the project, local property giant Filinvest Development Corp., earlier sought Megawide’s disqualification. One of GMR’s board of directors also held a post with another company involved in the bidding process, said Filinvest, which had partnered with the developer of Singapore’s Changi airport to pursue the Cebu contract.

Filinvest submitted the second-highest bid for the project, behind Megawide.

 

ADB lends $75m for Mactan

Manila Standard Today, 28 January 2015
By Jennifer Ambanta

The Asian Development Bank approved a $75-million loan for the expansion and renovation of the Mactan-Cebu International Airport, the first large-scale public-private partnership project awarded by the government.

The financing for the project includes debt of P20 billion ($450 million) from a consortium of local banks consisting of BDO Unibank Inc.; Bank of the Philippine Islands; Development Bank of the Philippines; Land Bank of the Philippines; Metropolitan Bank & Trust Company; and Philippine National Bank.

The loan from ADB and co-financing from the consortium of private banks will be provided to GMR Megawide Cebu Airport Corp., a consortium of India’s GMR Infrastructure Ltd and Philippine construction firm Megawide Construction Corp., which won the bidding for the expansion and upgrade of the airport.

“ADB’s involvement demonstrates its commitment to assist the government in developing critical infrastructure, the lack of which has been hampering new investments in the country,” said Christine Genalin Uy, investment specialist in ADB’s private sector operations department.

“The project will increase tourism, and support industry and agricultural activity, thus creating employment opportunities in the province of Cebu and its neighboring provinces,” Uy said.

Cebu is among the fastest growing regions in the Philippines and a major contributor to the country’s economy. It is the gateway to the Visayas islands but the existing airport at Mactan can no longer cope with the surge in passenger numbers.

Mactan Cebu airport, which opened in the 1960s, was designed to serve up to 4.5 million passengers a year but in 2014 it served over 7 million. The project—which aims to deliver high-quality airport terminal operations in line with international standards—will include the construction of a new passenger terminal and renovation of the existing one, as well as providing new commercial facilities.

Passenger capacities at the new terminal and upgraded one will reach 12.5 million each year. The project will be developed under a 25-year concession agreement for the operation of both terminals and commercial outlets.

Megawide-led group secures ADB loan for Mactan airport upgrade

InterAksyon, 28 January 2015
By Darwin G. Amojelar

MANILA – The Megawide-led consortium that bagged the contract to expand the Mactan Cebu International Airport has secured a loan from the Asian Development Bank (ADB) and six other lenders for the project.

In a statement, the ADB said it approved a $75 million (approximately P3.3 billion) loan to GMR-Megawide Cebu Airport Corporation (GMCAC), the winning bidder for the P17.5 billion Mactan Airport expansion project.

GMR-Megawide is led by India’s GMR Infrastructure Limited and the Philippines’ Megawide Construction Corporation.

The consortium will also take out a $450-million (about P20 billion) loan from a syndicate of banks that include four private lenders — BDO Unibank, Bank of the Philippine Islands, Metropolitan Bank and Trust Company and Philippine National Bank — and two state-owned lenders — Development Bank of the Philippines and Land Bank of the Philippines.

“ADB’s involvement demonstrates its commitment to assist the government in developing critical infrastructure, the lack of which has been hampering new investments in the country,” Christine Genalin Uy, investment specialist from ADB’s Private Sector Operations Department, said.

“The project will increase tourism, and support industry and agricultural activity, thus creating employment opportunities in the province of Cebu and its neighboring provinces,” Uy added.

One of the Aquino administration’s public-private partnership (PPP) ventures, the Mactan Airport project will include the construction of a new passenger terminal and renovation of the existing one, as well as the provision of new commercial facilities. This would increase passenger capacity to 12.5 million a year.

The project will be developed under a 25-year concession agreement for the operation of both terminals and commercial outlets. Project completion is slated for 2020.

“We feel honored for the immense trust and support placed by ADB and this is an important milestone in our PPP journey,” Manuel Louie Ferrer, GMCAC president said in a separate statement.

“Improvements of MCIA’s infrastructure is necessary to further stimulate the domestic industry and enhance socioeconomic opportunities. Hence both the grantors and concessionaires must ensure prompt completion of the project,” Ferrer added.

Bloomberry to make first foray overseas

Business World, 27 January 2015
By Krista A.M. Montealegre

THE OPERATOR of Solaire Resort and Casino is making its first foray abroad with a plan to build a casino and entertainment complex in South Korea.

In a disclosure to the Philippine Stock Exchange yesterday, Bloomberry Resorts Corp. said it is buying an aggregate 12.2-hectare plot of land in the Incheon Free Economic Zone (IFEZ), where a “leisure and tourism complex with entertainment facilities and mixed-use developments” will rise.

IFEZ is a few minutes away from the Incheon International Airport and close to Chinese cities such as Beijing and Shanghai.

Bloomberry shares rose 0.93% to close at P13 apiece yesterday.

Bloomberry Chairman Enrique K. Razon, Jr. has said the company was exploring opportunities to bring the Solaire brand overseas, including Japan.

“Korea has a thriving tourism, leisure and entertainment business,” Silverio Benny J. Tan, Bloomberry’s corporate secretary, said in an e-mail to BusinessWorld.

South Korea, which is keen to boost tourism, has said it will approve two new casino resorts and hopes to select operators this year. Operators are expected to invest at least one trillion won ($925 million) in their resorts.

Two casino resorts in Incheon have already been approved. A venture between South Korea’s Paradise Co. Ltd. and Japan’s Sega Sammy Holdings, Inc. has invested 1.3 trillion won in a resort project that broke ground late last year. Caesars Entertainment Corp. and Lippo Ltd. have pledged a combined 2.3 trillion won for an integrated resort expected to be ready by 2018.

The resort could be completed within five years, Reuters reported.

Unlike others which have formed joint ventures, Bloomberry plans to go solo with its investment in South Korea.

“It is very near China and is a popular destination for Chinese tourists so it is an attractive area for BLOOM’s expansion,” Mr. Tan said.

BLOOM is the ticker symbol for Bloomberry.

Macau’s casinos posted their first annual revenue decline in 2014 to end a decade of expansion, as the Chinese government’s anti-corruption drive spooked high rollers, who account for bulk of the gambling hub’s casino receipts.

As a result, VIPs are making their bets elsewhere and other emerging gaming markets like the Philippines and South Korea are vying to get a share of those high rollers.

“South Korea is accessible from China and because of the crackdown, it is expected to pick up the slack from the slump in Macau,” said Luis A. Limlingan, business development head at Regina Capital Development Corp.

Mr. Razon’s vast experience in running International Container Terminal Services, Inc. (ICTSI) — a developer, manager and operator of container terminals in gateway ports in over 20 countries across the globe — may work in Solaire’s favor when it expands overseas, Mr. Limlingan added.

“Any expansion by the company is positive. I’m sure they are not making a gamble in investing overseas. It will shore up revenues in the long run,” said Astro C. del Castillo, managing director at First Grade Finance, Inc.

The first integrated resort complex to rise in Entertainment City, Solaire may be drawn to expand overseas as the Philippine gaming market has yet to take off, with analysts citing the lack of infrastructure as the main challenge to boost that industry’s growth.

“In the Philippines, it is taking longer than anticipated to get an ROI because of infrastructure bottlenecks. It’s mostly the local market. They can’t seem to get the VIPs,” Limlingan said. ROI stands for return on investment, which measures the efficiency of an investment.

The Philippines is building an expressway — funded under the public-private partnership (PPP) scheme — that will connect Metro Manila’s three airport terminals to the Entertainment City, the casino-resort complex that state-run Philippine Amusement and Gaming Corp. envisions to be Asia’s next gambling mecca.

That expressway, meant to make it easier for foreign gamers to get to Entertainment City straight from the airport, was originally scheduled to start partial operations in April this year and become fully operational by January 2016, according to documents from the PPP Center. But as of Jan. 5, the so-called Ninoy Aquino International Airport (NAIA) Expressway that is being built by a subsidiary of San Miguel Corp., is just 19.21% complete, according to the PPP’s Web site.

The other integrated resorts in Entertainment City are the City of Dreams Manila, a joint venture between the Philippines’ richest man Henry Sy, Sr. and Macau-based Melco Crown Entertainment Ltd.; Bayshore City Resorts World, a partnership between Alliance Global Group, Inc. and Genting Group; and Manila Bay Resorts of Japanese billionaire Kazuo Okada.

Of the three, only the City of Dreams Manila has opened its doors to the public with a grand launch set for Feb. 2.