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2015 highlights of PH economy

The Philippine economy sustained its growth in 2015, creating opportunities for businesses and adding jobs in the labor force. Following are the 2015 highlights of the Philippine economy and business, as reported by The Standard and ranked according to their significance, relevance or popularity.  Others are simply interesting or controversial.

1. BPO sector employs 1.2m

Employment in the information technology and business process outsourcing sector likely reached 1.2 million in 2015. That large workforce of mostly young BPO professionals with strong purchasing power fuelled consumer spending in the Philippines and created a huge demand for office space and condominium units in Metro Manila and other urban centers in the country.

In terms of revenues, the IT-BPO sector likely contributed $22 billion in 2015, on track to equal OFW remittance level by 2017. The IT Business Process Association of the Philippines is now in the process of formulating the new 2016-2022 roadmap.

SPi Global call center employees in Manila handle customer support, technical problems and other tasks for overseas clients. BLOOMBERG

2. People lose money in stocks

The Philippine peso and stocks fell in the second half of 2015, as global funds fled emerging markets and tightening monetary policy in the US boosted the dollar. The peso slumped 5 percent in 2015 to close at 47.06 a dollar on Dec. 29.

The Philippine Stock Exchange index, the 30-company benchmark, shed 3.9 percent in 2015, ending six years of gains. Foreign investors sold $1.2 billion more shares than they bought this year, dragging the PSEi to its first loss since 2008.

Analysts said they remained bullish on the local stock market on favorable domestic prospects.

3. GDP grew 6 percent in Q3

The gross domestic product of the Philippines grew by 6 percent year-on-year in the third quarter of 2015.

The third-quarter GDP is an improvement from the 5.8-percent expansion in the second quarter, and from 5.5 percent in the same quarter in 2014.

Economic growth in the first three quarters of 2015 is now at 5.6 percent. A 6-percent full-year growth is very likely given even better prospects for the last quarter, said Economic planning chief Arsenio Balisacan.

4. Asean integration starts

The Association of Southeast Asian Nations launched an economic community on Dec. 31, 2015, heralding a regional free trade which is expected to boost the economies of the 10 member states with a combined population of over 600 million.

The Asean Economic Community, a single market with a free flow of goods, capital and skilled labor across borders, officially started on Dec. 31, 2015.

AEC has a combined market of more than 600 million people with total GDP of $2 trillion across 10 countries, including Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar,  the Philippines, Singapore, Thailand and Vietnam.

5. Philippines hosts Apec summit

Manila has successfully hosted the Asia-Pacific Economic Cooperation Summit, where leaders from 21 economies attended, despite security threats.

Trade Secretary Gregory Domingo said the Philippines made significant contributions in advancing the objectives of the regional bloc.

“Our work has gathered support for member economies to collectively work towards an Asia Pacific region that addresses gaps in economic development, sustains long-term and inclusive growth, and benefits our micro, small and medium enterprises,” Domingo said.

Deputy Presidential Spokesperson Abigail Valte said tourist arrivals during the Apec week reached more than 11,000, exceeding the government’s target of 10,000 tourists.

The Apec summit received international media coverage, with US President Barack Obama leading the delegation.

6. Visitor arrivals top 5m

Despite the so-called “tanim bala” scare, or the alleged extortion scheme where bullets were found inside the luggage of passengers at the airport, the Philippine tourism industry reached a milestone in 2015, as international visitor arrivals topped the 5-million mark for the first time on record.

“The short answer to the question whether it [tanim bala] has affected tourist arrivals is no,” Tourism Undersecretary Benito Bengzon Jr. said.

The country welcomed the 5 millionth international visitor at the Ninoy Aquino International Airport on Dec. 21. Bengzon, a veteran in the Tourism Department, said the tourism industry would likely end the year with 5.2 million to 5.3 million visitor arrivals, up by 8 to 10 percent from 4.83 million arrivals registered in 2013.

7. Merchandise exports decline

Merchandise exports of the Philippines fell in 2015, on lower sales of garments, agriculture, mineral and petroleum products.

Data from Philippine Statistics Authority showed that exports dropped 10.8 percent to a six-month low of $4.59 billion in October from $5.14 billion a year earlier.  This brought total exports in the first 10 months to $48.9 billion, down by 6.2 percent from $52.1 billion recorded in the same period last year.

“The lingering sluggish global demand, as well as the slack in industrial activity in the United States and the recent economic adjustments in China, brought down the country’s exports. Exports performance in the succeeding months is also anticipated to remain weak given the slowdown in economic growth of the country’s major trading partners,” said Economic Planning Secretary Arsenio Balisacan.

8. Pandacan depot dismantled

Pilipinas Shell Petroleum Corp. has fully dismantled its oil tanks in Pandacan, Manila to comply with the Supreme Court’s ruling directing the transfer of the oil companies’ depot outside the city, due to safety concerns.

Pilipinas Shell country chairman Ed Chua said the company had fully complied with the high tribunal’s decision but had yet to decide on what to do with the dismantled area.

Shell, Petron Corp. and Chevron Philippines jointly operate the Pandacan oil depot. All three companies have ceased their oil depot operations.  Shell said it also shut down its automated lube blending oil plant in Pandacan.

9. GMO ban affects food output

The Supreme Court’s ruling banning field trials and importation of genetically modified crops will affect the livestock, poultry and aquaculture industries and increase food prices next year.

“The reality is a lot of people will be affected by that decision. Aside from Bt eggplant, they also banned the importation of genetically modified corn and importation of raw materials like soybean,” Philippine Maize Federation Inc. President Roger Navarro said.

The Supreme Court earlier ordered a ban on the field trials of genetically modified organisms, including Bt eggplant, and imposed a temporary ban on approving applications for the contained use, import, commercialization and propagation of GM crops.

Makati commercial business district skyline

10.  Euro 4 petroleum required

The Philippines implemented the Euro 4 emission standards in 2015, ahead of its neighbors.

“Combined with the introduction of cleaner fuel standards such as Euro 4, motorists can be assured that their engines will be equipped with specially-formulated ingredients which would not only keep engines clean but also offer maximized power, better fuel economy, smoother drive, lower emissions and reliable performance,” Chevron Philippines said.

The Euro 4 rollout is in compliance with the Philippine Clean Air Act and Energy Department Circular No. DC2015-06-0004, mandating the use of environmentally clean fuels that meet specified emission standards.

11. Vehicle sales top 300,000

Sales of motor vehicles in the Philippines increased 26 percent year-on-year in November 2015, putting the automotive industry on track to reaching new record sales of 310,000 units this year.

The Chamber of Automotive Manufacturers of the Philippines Inc. and the Truck Manufacturers Association said in a joint report their members sold 26,979 vehicles in November, up from 21,422 units sold in November 2014.

“With another impressive growth in November 2015, we are most likely to achieve our target of 310,000 units for the year,” said Campi President Rommel Gutierrez.

This brought total sales in the first 11 months to 261,930 units, or 22.7 percent higher than 213,427 units sold in the same 11-month period in 2014.  The figures exclude those reported by another industry group.

12. Solar, wind plants deliver power

Investors are building large solar and wind power plants to deliver renewable energy to Philippine households. San Carlos Sun Power Inc. said it was on track to completing a 59-megawatt solar power project in San Carlos City, Negros Occidental by January 2016.

Enfinity Philippines also broke ground to start the construction of the largest solar farm in the country located in Sta. Rosa, Concepcion, Tarlac, with a rated capacity of 50.55 MW.

Meanwhile, the Energy Regulatory Commission approved the application of three operational wind power projects for a new feed-in-tariff rate of P7.40 per kilowatt-hour. These projects are Trans-Asia Renewable Energy Corp.’s 54 MW San Lorenzo wind power project in Guimaras, PetroWind Energy Inc.’s 36-MW Nabas wind project in Aklan and Alternergy Wind One Corp.’s 54-MW Pililla wind power project in Rizal.

ERC earlier approved an FIT rate of P8.53 per kWh for three wind projects under the first wave of installation targets, including Energy Development Corp.’s 150-MW Burgos wind project, Northwind Power Development Corp.’s 18.9-MW phase 3 wind project and North Luzon Renewable Energy Corp’s 81-MW Caparispisan wind project in Ilocos Norte.

13.  A new city rising in Clark

The Philippines is building an alternate capital in Tarlac province near an air base that was damaged 24 years ago by one of the biggest volcanic explosions of the 20th century.

Arnel Casanova, president of state-run Bases Conversion and Development Authority, disclosed a plan to turn the former US military base, Clark, into a backup capital, complete with facilities for government agencies, the central bank and financial exchanges.

Clark Green City is a master planned property within the Clark Special Economic Zone. It is envisioned to be the country’s first smart, green and disaster-resilient metropolis.

14.  Jobless rate at 10-year low

Unemployment rate in the Philippines declined to 5.6 percent of the labour force in October 2015, the lowest in 10 years, from 6 percent a year ago, as more jobs were created over the past 12 months, according to the Philippine Statistics Authority.

“This is also the first time that unemployment rate dropped below 6 percent. In fact, for the full year 2015, the country did better than the Philippine Development Plan target of 6.6 to 6.8 percent for unemployment. This is due to faster employment growth in the services and industry sectors,” said Economic Planning Secretary Arsenio Balisacan.

Data from the quarterly labour force survey of PSA showed that the number of jobless individuals declined to 2.372 million in October from 2.483 million in the same month last year.

Underemployment rate also eased to 17.6 percent in October from 18.7 percent a year ago.  In absolute terms, there were 7.021 million underemployed individuals as of October.

15.  Inflation falls below 1%

Inflation rate in the Philippines fell to a record-low of 0.4 percent in September and October, on lower food and fuel prices.

The October reading brought the 10-month average inflation rate to 1.4 percent, below Bangko Sentral’s 2 percent to 4 percent target for the year.

“Our current runs show inflation is possibly bottoming out, and it will gradually move to within target range [2 percent to 4 percent] in 2016 to 2017. While there seems to be room to ease given the relatively lower inflation at the moment, risks to the outlook remain—El Niño and pending requests for utility rate hikes, for instance,” Bangko Sentral Governor Amando Tetangco Jr. said.

16.  Fitch lifts PH outlook

Fitch Ratings has lifted the ratings outlook for the Philippines to positive from stable, a signal that the debt watcher may upgrade the country’s credit score within the next 12 to 18 months.

Fitch which granted a credit rating of BBB-, the minimum investment grade, on the Philippines in March 2013, recognized the economy’s strong growth performance and its ability to confront external headwinds better than most emerging markets.

Bangko Sentral Governor Amando Tetangco Jr. said the positive outlook from Fitch “signals the long overdue credit rating upgrade, which appropriately reflects the economy’s outperformance.”

17.  Philippines left out of TPP

The Philippines has been left out of the Trans-Pacific Partnership, a new economic bloc led by the US.

Trade Secretary Gregory Domingo said the Philippines remained interested in joining TPP, which is seen to become the world’s largest economic free trade area.

“Being excluded from the TPP will mean possibly losing existing markets and losing potential new markets and investments from TPP member countries which include major trade partners like US and Japan, to fellow Aseans, which include Vietnam and Malaysia. This is called market diversion effect,” said Philexport president Sergio Ortiz-Luis Jr.

18.  Govt passes anti-monopoly law

The government passed into law the Competition Act, which is expected to promote innovation in various key industries.

“The Competition Law ensures a level playing field in trade, industry and all commercial economic activities. It pushes firms to be innovative in improving goods and services, which, in turn, makes them more productive and efficient. As a result, consumers are provided with more choices of quality goods and services at lower prices,” said National Economic and Development Authority deputy director general Emmanuel Esguerra.

19.  Foreign banks enter Manila

Sumitomo Mitsui Banking Corp. has opened its first Philippine branch in Makati City.  SMBC Manila became the first branch to be opened by a foreign bank in the country since the Philippine government enacted a new law in 2014 that allowed the full entry of foreign banks into the Philippines.

Cathay Life Insurance Corp. of Taiwan became the biggest recent investor, when it infused P17.9 billion in Rizal Commercial Banking Corp. in a deal that gave the Taiwanese company a 20-percent stake in the Philippine bank.

20.  Traffic affects economy

Economic losses due to worsening road traffic amounted to P2.4 billion a day in 2015, a figure that could hit P6 billion a day by 2030, according to Senator Bam Aquino.

A study by Japan International Cooperation Agency showed the lower-income households would be the hardest hit when congestion worsens by 2030 as they will spend no less than 20 percent of their monthly household income for transport.

“Without intervention, traffic demand will likely increase by 13 percent [by] 2030, and transport cost will be 2.5 percent higher,” the senator said.

Among the factors that contributed to the worsening traffic condition is the significant population increase in Metro Manila which now stands at 16.5 million.

21.  Investment scams proliferate

The Securities and Exchange Commission has expressed alarm over the proliferation of investment scams in the country, such as the Ponzi and pyramiding schemes.

The corporate regulator found “appalling” that a number of victims admitted awareness of the illegal and non-sustainability of the investments they had made.

It said some of the people who invested in the scams used their savings, borrowed money and sold properties and recruited and convinced their families, friends and relatives to do the same.

SEC said it would also go after the recruiters and sellers of the illegal investment securities and the founders and officers of the scams as well.

22. First PPP project completed

After five years of talks, the Aquino administration inaugurated the Daang-Hari-South Luzon Expressway Link Road, also known as the Muntinlupa-Cavite Expressway.

The toll road is the first infrastructure project completed under the public-private partnership scheme. The road passes through the New Bilibid Prison reservation that connects Bacoor, Cavite province, to South Luzon Expressway.

23.  Recto Bank exploration frozen

The government asked Forum Energy Plc. not to proceed with exploration or drilling at Service Contract 72 which straddles the Recto Bank.

The exploration schedule was deferred because of the territorial dispute over the West Philippine Sea.

The Energy Department confirmed the suspension of the projects in SC 58 amid the territorial dispute. “The arbitration case [filed by Philippines against China] resulted to refrain in our exploration activities in the West Philippine Sea. However, I believe that after the decision, our policy will have to ensure enforcement of our rights to protect and utilise the resources within our EEZ [exclusive economic zone]. SC 58 will definitely develop its area with the full support of the Philippine government,” said Rino Abad, director of the Energy Resource Development Bureau.

24. PAL flies to New York

Philippine Airlines launched an inaugural flight to New York via Vancouver, after an 18-year absence, as a part of its network expansion to the US East Coast.

PAL, a 74-year-old airline which flew its first aircraft from Manila to Baguio on March 15, 1941, embarked on US network expansion following the lifting of the Category 2 rating by the US Federal Aviation Administration.

The airline first flew to New York in 1996, but pulled out the service a year later at the height of the Asian financial crisis.

PAL president Jaime Bautista said the airline resumed flights to New York as an “answer to the clamor of the huge Filipino community in the US East Coast.”

25. Monde buys British company

BDO Unibank Inc. has played a major role in financing the $831-million acquisition of the United Kingdom-based meat substitute business by Philippine noodle manufacturer Monde Nissin.

Monde Nissin beat competition from some global food giants to clinch the deal for Quorn, which had sales of 150.3 million pounds in 2014. UK-based investment firms Exponent Private Equity and Intermediate Capital Group, Quorn’s owners, announced the sale.

Monde Nissin is one of the leading food consumer goods companies in the Philippines. Quorn, on the other hand, is an international meat substitute business, with market-leading positions in 15 countries.

26. Telstra eyes the Philippines

San Miguel Corp. is teaming up with Telstra Corp. of Australia to build the Philippines’ third mobile broadband telecommunications network.

Telstra chief Andy Penn said the Australian telco giant might spend up to $1 billion if it went ahead with plans to launch a new mobile phone venture with San Miguel.

The new company will compete with Philippine Long Distance Telephone Co. and Globe Telecom.

San Miguel Corp. reportedly plans to use its “very powerful” frequency band to build a new mobile broadband company in joint venture with Telstra.

27.  Shell contests P53-b tax

The operator of the Malampaya natural gas project plans to go to international arbitration to challenge a P53.14 billion tax claim by the government.

Shell Philippines Exploration B.V., is the operator of Malampaya in the southwestern Philippines, along with partners, Chevron Malampaya LLC, and the Philippines’ state-owned PNOC Exploration Corp.

The companies are challenging a 2011 finding by the Commission on Audit that the project partners owed the government P53.14 billion in taxes in addition to royalties on the gas produced.

The Department of Energy said the taxes were already included in the government’s royalty take of 60 percent of the project’s net income.

28.  Emperador acquires Fundador

Emperador of the Philippines will purchase Fundador of Spain and Harveys of the UK.

Emperador said it had reached an agreement to purchase Spain’s Fundador from US-based Beam Suntory for 275 million euros (US$291 million). Fundador produces popular brandies including one of the same name and the Terry Centenario and Tres Cepas brands. It also makes Harveys, a sherry.

Last year, it paid 430 million pounds for Scottish whisky maker Whyte and Mackay and 60 million euros for half of Spanish brandy producer Bodega Las Copas. It has also been acquiring Spanish vineyards and brandy stocks.

29.  Mitsubishi faces complaints

Several individuals have filed complaints before the Trade Department against Mitsubishi Motors Philippines Corp. for the sale of alleged defective Montero units, which allegedly suffered from sudden and unintended acceleration.

The Trade Department recommended tapping third party experts to further investigate the incidents.  

“We assure all Montero Sport owners that we remain committed to a transparent resolution of this alleged SUA issue and to provide safe and quality vehicles. MMPC deeply regrets and sympathises with its customers that have been affected by the alleged SUA issues. MMPC will continue to work with its customers to assure their safety,” Mitsubishi Philippines said.

30.  CRH buys LaFarge Republic

CRH of Ireland teamed up with Aboitiz Equity Ventures to acquire the cement plants of Lafarge in the Philippines.

The assets acquired by CRH in the Philippines include Lafarge Republic Inc., Luzon Continental Land Corporation and Lafarge Cement Services (Philippines).

Stockholders of Lafarge Republic, Inc. approved the change of the company’s name to Republic Cement & Building Materials, Inc. The company last changed its name in June 2012.

CRH teamed up with AEV for the investment to comply with foreign ownership rules in the Philippines.

31. Mandarin, Intercon close doors

InterContinental Manila and Mandarin Oriental Hotel, two iconic hotels in Makati City, closed doors in 2015.

Mandarin Hotel was being demolished to give way to a new development in Makati.

Meanwhile, AyalaLand Hotels and Resorts Corp. and InterContinental Hotels Group ended their contract for InterContinental Hotel on Dec. 31.

Ayala Land Inc. will build a new commercial, mixed-use development in site of InterContinental Hotel.

32.  Ayala redevelops Jaka Tower

Property developer Ayala Land Inc. will spend P6 billion to acquire and develop the former Jaka Tower, an eyesore along Ayala Ave. in Makati City, into a 49-story premium office tower called Alveo Financial Tower.

Alveo Land head of project development group Jennylle Tupaz said the company started pre-selling the office units in Alveo Financial Tower.

The company has sold over 60 percent of the total units so far, generating PhP5.6 billion in sales take-up.  About 80 percent of the office unit buyers were local investors, while 20 percent were taken up by foreign investors.

33.  Semirara mine suspended

The Energy Department lifted the suspension order on the coal operating contract of Semirara Mining and Power Corp. in Caluya, Antique, after the company complied with the conditions set by the government.

The department issued a suspension order immediately after July 17, 2015 accident at the north Panian site of Semirara Mining’s operations in Antique, which claimed the lives of nine miners.

Semirara Mining imposed a nine-month suspension against the department heads of mine truck and shovel operation department, mine planning and engineering department, safety, health and environmental department and geology department starting from September 2015 until June 2016.

34.  PSALM cancels San Miguel deal

State-run Power Sector Assets and Liabilities Management Corp. has terminated the contract to manage the output of Ilijan power plant in Batangas, one of the country’s largest power facilities.

SMC Global Power Holdings Corp., a unit of conglomerate San Miguel Corp., said it planned to file a case against PSALM.

PSALM canceled the independent power producer contract of San Miguel unit South Premiere Power Corp. for the 1,200-megawatt Ilijan power plant.

35.  Cherry Foodarama reopens

Conglomerate SM Investments Corp. kept the name of Cherry Foodarama, a supermarket chain which it has recently acquired.

The Ong family, which owned Cherry Foodarama, retained a minority interest in the supermarket chain. SMIC Vice Chairman Teresita Sy-Coson said SMIC would not rebrand the three newly acquired supermarkets, which would continue to operate under the name Cherry.

Topics: 2015 highlights of PH economy
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