Singaporean firms look to PH for golden opportunity

By Doris Dumlao-Abadilla

As Singaporean companies prepare to expand their footprint across Southeast Asia, the Philippines is among those poised to attract a big chunk of those investments, according to British banking giant HSBC.

Around 77 percent of Singapore-based companies indicated plans to expand in the region and the Philippines was among the five most favored markets, based on a report by the Singapore Business Federation that was commissioned by HSBC.

The study sought the insights of 1,063 Singapore-based companies on their interest in overseas expansion. Of these, 86 percent were small and medium enterprises (SMEs), defined as those with annual turnover of 100 million Singaporean dollars or those with less than 200 workers.

The survey showed 74 percent of Singaporean firms already have existing operations in the Philippines. Other top markets are Malaysia at 87 percent, Indonesia at 81 percent, Thailand at 80 percent, and Vietnam at 74 percent.

About 21 percent of Singaporean companies expect to expand in the Philippines in the next two years, banking on the growing consumer market and overall investment climate.

Most of the Singapore-based SMEs entering the Philippines or expanding their operations are keen on local partnerships. The research found that more than 68 percent of those surveyed in the Philippines had a distributor or joint venture arrangement, the largest ratio within the Association of Southeast Asian Nations (Asean).

In a press statement, HSBC Philippines president and CEO Wick Veloso said: “Singapore-based SMEs can make a significant contribution to the Philippines’ economy. These firms are looking to expand beyond their domestic markets and can benefit from the cross-border activity that was previously seen as the domain of larger corporates.”

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PEZA seeks GOCC status

The Philippine Economic Zone Authority (PEZA) seeks an amendment to its charter and be converted into  a government-owned and controlled corporation (GOCC)  placed directly under the Office of the President.

Charito Plaza, director-general of PEZA, the amendment will enable the agency grant even more attractive incentives as well as subsidies.

Plaza sees the need to amend the 23-year old PEZA law which she described as weak and lacking.

Currently an attached agency of the Department of Trade and Industry, PEZA has its own law that becomes the basis of its grant of some incentives, such as the preferential 5 percent tax rate on  gross income earned of registered companies.

But PEZA defers to the Omnibus Investments Code to provide incentives and to which sectors.

Plaza also noted  the PEZA law needs to be updated to reflect new industries that have emerged,  such as the information technology sector, and explicitly provide that they should be granted incentives.

By granting  PEZA the authority to grant incentives, Plaza said it would be more flexible in attracting incentives, making the country  at par with other countries like China and Vietnam. 

PEZA could then grant subsidies for power and land use on basic   industries like steel and other such strategic project which are badly needed.

The PEZA board could make recommendations on incentives to the Office of the  President for approval.

Plaza said  PEZA would then be removed from the jurisdiction of the proposed Fiscal Incentives Review  Board under the Tax Reform for Acceleration and Inclusion 2 which will have the authority to grant incentives.

She added the agencies comprising the FIRB are the same ones that make up the PEZA board at present, which would be redundant if no amendments to the law are introduced.

As a GOCC, PEZA would be fully independent  and will be able to exercise the powers to be provided under the amended PEZA law.

Plaza sees this as a signal to investors that it easy doing business in the Philippines.

“It will be an attraction to investors…  the more interferences from different bodies and agencies the more that investors will be discouraged,” she said.

GOCCs are state agencies can engage in both commercial and non-commercial transactions. They are given state subsidies but are tasked to remit subsidies to the national government.

PEZA at present remits of its revenues to the government.

With the new PEZA law, Plaza said the agency would be restructured and would have a clearer identity.

“Right now, we don’t know our personality. Some are saying that we are a GOCC, others say we are just a government instrumentality,” Plaza added.

Plaza said the draft PEZA law would be filed before or soon after the State of the Nation Address on July 23.


DOTr gives consortium original proponent status


By Myla Iglesias

CLARK, Pampanga. --  The Department of Transportation (DOTr) has given the  so-called super consortium composed of seven conglomerates an original proponent status (OPS) on its P106-billion unsolicited proposal for the expansion, rehabilitation and operation of the Ninoy Aquino International Airport (NAIA).

In a press briefing here, DOTr Secretary Arthur Tugade said the decision of the agency’s planning department has been endorsed to the Manila International Airport Authority (MIAA) for final approval.

The MIAA board is expected to come up with its decision  within the week.

The NAIA consortium --  composed of Aboitiz InfraCapital Inc., AC Infrastructure Holdings Corp., Alliance Global Group Inc., AEDC, Filinvest Development Corp., JG Summit Holdings Inc. and Metro Pacific Investments Corp. -- revised its proposal in compliance with the DOTr’s  request to shorten the concession period from the original 35 years to 15 years.

 The group also removed from the proposal the construction of a  third runway which significantly reduced the  project cost from P350 billion to P106 billion.

Ed Monreal, MIAA general manager, said once approved by the MIAA board, the proposal would revert to the DOTr which would endorse it to National Economic Development Authority Investment Coordinating Committee (ICC) for further approval.

 One approved, the DOTr can then  subject the project to a Swiss challenge.

The consortium offered to improve NAIA’s landing and take-off per hour from its current capacity of 40 current to 52  by 2022. 

The terminals will be connected by airport people movers for passenger convenience when transferring between terminals. The airport will also have a rail access and linkages.

The award of OPS to the NAIA consortium, once finalized, officially rejects the proposal of Megawide-GMR which  offered to upgrade NAIA for P150 billion for a period of 18 years
Meanwhile, Tugade said the DOTr will implement reforms to expedite the procurement and implementation process of the major infrastructure projects to increase the agency’s budget disbursement rate.

According to a 2017  report of the Commission on Audit, the DOTr only utilized and disbursed 25.6 percent or P18 billion of its total P71-billion budget last year.

Tugade said the lower disbursement was due to change in policy such as the deferment of the Bus Rapid Transit projects in Quezon City and on EDSA; unbundling of five regional airports and; the implementation of a single procurement contract for Metro Rail Transit from multiple contracts engaged by previous administrations.

The DOTr vowed to implement the following reforms: reorganize the project management offices, expedite in-house preparation of detailed engineering design preparations; early procurement activities, among others.
It will also implement a no-advance payment policy on contracts and will require contractors to submit regular billings. It will also slap  sanctions/penalties for non-or late submission.

Tugade said once these reforms are implemented, implementation of projects will be shortened to four months from eight months.


LRT extension to Sucat done by 2021

Light Rail Manila Corp., the  private operator of Light Rail Transit Line 1 (LRT-1) is waiting for the government to deliver the complete right-of-way (ROW) and to approve the pending fare adjustment to start the construction of the 11-kilometer LRT extension to Cavite.

The extension of LRT-1 to Sucat could start serving riders by the end of 2021 if work on site starts by February 2019, and the ROW is free and clear by May 2019.

 “We are just waiting for the complete ROW and government approvals especially on the delayed increase in our fares from around an average of P20 to around P25 depending on the distance travelled, which is basically the same as bus fares,” said Juan Alfonso, LRMC president.

 Alfonso said LRMC’s contract with the government allows it to increase fares  every two years starting in 2016 to give it  enough funds to properly maintain and operate the line. 

LRMC’s P5-fare increase bid would cover both the 2016 and 2018 adjustments.

 Without the increase, LRMC might not be able to borrow from banks the funds needed to build the extension.

 “The banks want to make sure we can repay them and the only way this can be attained is for us to be able to earn enough through higher fares,” Alfonso said.

 He added similar railway systems abroad are efficient and well-run because riders pay the proper fares. 

 “It is not sustainable to keep fares at the current level without sacrificing service quality. We strive to bring world-class service to the Filipinos and this will entail new investments,” Alfonso said.

 After Sucat, the extension will go to Las Pinas and Niog, in Bacoor, Cavite.

 “But we can go to Las Pinas and Bacoor only after we have built Sucat, and that means we must have the fares adjusted first,” Alfonso said. 

LRT-1 extension will cut travel time from Baclaran to Las Pinas to  20 minutes  and to Bacoor to 30 minutes.


AboitizPower to build 48-MW battery storage

By Jordeene Sheex Lagare

LISTED AboitizPower Corp. will be constructing a 48-megawatt (MW) battery storage in Mindanao to better provide contingency services, a top company official said.

“I’m putting up a 48-megawatt battery,” AboitizPower Chief Operating Officer Emmanuel Rubio told reporters on the sidelines of the Electricity Policy in the Philippines Forum and Book Launch hosted by the University of the Philippines’ Energy Policy and Development Program (EPDP).

The battery storage is going to be attached to an oil plant in Mindanao, Rubio said on Wednesday, adding the plant’s capacity is already contracted to AboitizPower.

“It’s something that we’re looking at to enhance our ability to provide ancillary services,” he said.

“What we would like to do is to be better in providing contingency reserve and we’re looking at battery as a solution to actually be better, that would enhance our ability to offer contingency reserves given that we already have that contract today,” he added.

Rubio said AboitizPower is conducting “very preliminary work” which entails a technical study.

“We have to work closely with NGCP [National Grid Corp. of the Philippines] as well but if all goes well, we can have it ready by end-2019,” he added.

AboitizPower is the holding company for the Aboitiz Group’s investments in power generation, distribution, and retail electricity services and has interests in both renewable and non-renewable generation plants.

Incorporated in 1998, it also owns distribution utilities that operate in high-growth areas in the country, including the second and third largest domestic private utilities.

Shares of AboitizPower fell P0.60 to P36.40 each.