Energy dep’t gives SC 54 contractors more time to explore

THE ENERGY department has granted a suspension of obligations to contractors of Service Contract (SC) northwest of Palawan to give participants more time to study the resource area.

Operator Nido Petroleum Ltd. said in a report to the Australian Securities Exchange on Friday that the department confirmed the approval of the moratorium period covering SC 54 Blocks A and B.

The moratorium period -- which starts from Aug. 5 of this year until Aug. 5, 2017 -- “provides both the Block A and Block B Joint Ventures sufficient time to study the presently sub-commercial areas and other areas of interest within these Blocks...”

Further information on the company’s obligation under the contract was not immediately available.

Based on its Web site, Nido operates both blocks of SC 54. The Australian oil and gas firm has 42.4% interest in Block A and 60% in Block B.

Covering 88,000 hectares, SC 54A is situated in shallow waters. Nido is looking for divestment opportunities in relation to the contract.

On the other hand, SC 54B encompasses 316,000 hectares. Further technical work is needed but Nido noted that “there is no firm work commitment related to Block B.”

Nido also holds a 22.88% stake in Service Contract 14C1, which covers the Galoc oil field also northwest of Palawan. -- Claire-Ann Marie C. Feliciano

source:  Businessworld

Philippines found among most restrictive

THE PHILIPPINES has the most restrictive environment for foreign investments in Southeast Asia, the Organization for Economic Cooperation and Development (OECD) said in a recent report, warning this could prevent the country from enjoying an expected surge of new money from investors now taking a closer look at the region.

In a report, titled: Southeast Asia Investment Policy Perspectives that was published last June, the 34-country group -- whose members include France, Germany, Japan, Mexico, South Korea, the United Kingdom and the United States -- cited its own FDI (foreign direct investment) Regulatory Restrictiveness Index showing the Philippines also as the most restrictive among 64 developed and developing countries. The index measures restrictiveness of FDI rules across 22 sectors, including agriculture, mining, electricity, manufacturing, as well as “main services” like transport, construction, distribution, communications, real estate, financial and professional services.

The report noted that Southeast Asia’s FDI prospects have improved in the last two decades due to the relatively strong economic growth of the region’s economies.

“Partly in response to these growth prospects and the rising middle class in one of the world’s most dynamic markets, direct investment in ASEAN (Association of Southeast Asian Nations) -- both from outside and within the region -- is likely to be at record levels for many countries over the next few years,” the report read.

“Southeast Asia was the only region to see rising inflows of foreign direct investments in 2012, while global flows fell 6%.”

However, benefits from such favorable scenario will not be equally distributed in ASEAN due to restrictions imposed by member states, OECD said.

In Southeast Asia, the Philippines and Myanmar were tagged as having the most restrictions for FDIs.

“In the Philippines, many restrictions on foreign equity and land ownership remain,” the report noted.

“The 1987 Constitution has a clause that supports laws restricting foreign ownership of property to 40%, with minor adjustments by subsequent laws. Further reforms in foreign access to local land require constitutional amendments,” the report noted.

Moreover, OECD cited the country’s restrictions on foreign ownership of banks, retail enterprises, telecommunications, and transport companies.

It should be noted, however, that the report was published prior to the enactment of the Republic Act No. 10641, or “An Act Allowing the Full Entry of Foreign Banks in the Philippines”, by President Benigno S.C. Aquino III last July.

‘LESS APPEAL’
Singapore was deemed the most open to FDI in the region, with OECD noting that the city-state is “often the first choice as a location by a wide margin.”

From the perspective of OECD investors, Thailand, Malaysia, and Indonesia come next to Singapore, while the Philippines and Vietnam have “less appeal to OECD investors.”

Meanwhile, Cambodia, Laos, and Myanmar are likely to be export-oriented in the medium term given their vast wealth of mineral and waters resources and a pool of relatively cheap labor, the OECD noted.

The findings of the report jibe with the results of the latest Global Competitiveness Report of the World Economic Forum, which evaluated 144 economies based on 12 “pillars of competitiveness” that drive productivity.

Singapore led the region in terms of business impact of rules on FDI -- one of the indicators used by the Forum to rank the economies surveyed -- followed by Malaysia, Thailand, Cambodia, Laos, Vietnam, Indonesia, the Philippines and Myanmar.

Sought for comment, Guillermo M. Luz, National Competitiveness Council private sector co-chairman, said: “Yes, we have a lot of foreign ownership restrictions which are very challenging for the business community.”

“However, we have to be very careful in pursuing economic amendments to the Constitution,” Mr. Luz warned in a text message.

“The current proposal will toss everything to Congress and that will put the entire burden on legislators. With all the bills they have to pass -- which are equally important -- then the amendments might take a long time to get passed.”

Asked if the OECD report bolsters the case for amending foreign ownership restrictions of the Constitution, House Speaker Feliciano R. Belmonte, Jr. replied via text: “Definitely.”

Mr. Belmonte had filed the Resolution of Both Houses (RBH) No. 1 at the start of the 16th Congress in July last year which seeks to add the phrase “unless otherwise provided by law” to provisions of the current Constitution that impose restrictions to foreign ownership and business participation, particularly for land, public utilities, natural resources, as well as media and advertising.

Mr. Belmonte has said that lifting such restrictions was critical to achieving the government’s goal of inclusive growth, since more FDIs are expected to result in additional quality jobs that, in turn, will lift more Filipinos out of poverty.

Plenary debates on RBH No. 1 are ongoing at the House of Representatives.

CONTROVERSIAL
Charter change has been proposed as early as the 1990s, but these efforts never prospered over fears that public officials would use it as an opportunity to extend their terms of office.

To allay fears that the current move to amend the Constitution could be used to extend the term of incumbent elected officials, Mr. Belmonte led the signing of a pledge at the House that committed legislators to introduce changes only for the charter’s economic provisions.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that net FDI inflows as of May amounted to $2.923 billion, 34% higher than the $2.182 billion registered in the same five months last year.

In May alone, net inflows reached $473 million, a turnaround from the $62-million net outflow recorded in the same month last year, BSP data showed further.

The increase, the central bank said, reflected “investors’ confidence in the country’s sound macroeconomic fundamentals.”

FDI net inflows reached $3.86 billion last year, 20% more than the $3.215 billion recorded in 2012 and breaching the central bank’s full-year forecast of $2.1 billion.

For this year, the central bank expects net FDI inflows to reach $1 billion, down from the initial estimate of $2.6 billion -- a drop the central bank said would be due to continued global financial market uncertainties.

source:  Businessworld

PNoy to lead infra investment roadshows in EU, US

President Aquino will embark next week on a five-country visit (Spain, Brussels, France, Germany and the US) tagging along with him a top-level business delegation to promote investments especially for the government’s pipeline infrastructure projects under the public-private partnership (PPP) program.

Trade and Industry Secretary Gregory L. Domingo told reporters at the launch of the “Philippine Bamboo Showcase” at the Design Center Philippines that an “Infrastructure Forum” will be among the highlights of the President trip to Europe.

The trip, which is a combination of state and working visits, will start on Sept. 13. Domingo, however, said it was not clear if the President will be present in the entire investment campaign which could run for a total of 12 days.

Domingo said that infrastructure has always been a part in all of the government’s investment roadshows overseas but stressed that this is the first time for the Philippines to hold an infrastructure forum in Europe. Domingo said the forum is being organized by the PPP Center. It is not yet clear as to where exactly the forum will be held, but said mostly probably it will be in Paris.

“We are targeting big funds and big project proponents,” Domingo said noting there are over 30 PPP pipeline projects that are in need of investors, funders and contractors.

“These are basically tollways, rail lines, seaports and airports,” he said.

The emphasis on infrastructure investments has been timely given foreign investors and analysts concern on the slow infrastructure investments happening in the country.

Domingo also said that while PPP projects started slow, he promised for a “fast finish.”

DTI Undersecretary Ponciano Manalo Jr. also told reporters that after Europe, the team will proceed to New York and San Francisco cities in the US.

Aside from infrastructure, Manalo said the Philippine team will also promote investments in aerospace, IT-BPM and manufacturing. From Europe, the team will proceed to New York and San Francisco cities in the US.

“It will be a 12-day investment roadshow starting on the 13th this month,” Manalo said.

 source:  Manila Bulletin

NEDA approves Mega Manila transport roadmap

The National Economic Development Authority (NEDA) Board, chaired by President Benigno S. Aquino III, has approved the “Roadmap for Transport Infrastructure Development for Metro Manila and Its Surrounding Areas”, which seeks to avert heavy congestion in Mega Manila by 2030 and improve mobility, connectivity and quality of life.

The study conducted by Japan International Cooperation Agency (JICA), however, warned that without intervention, traffic cost to the economy is expected to balloon to P6 billion a day from the current P2.4 billion.

he JICA study, conducted in close coordination with Department of Transportation and Communications, Department of Public Works and Highways, Metropolitan Manila Development Authority, and other relevant agencies, cited strategies to reduce traffic congestion significantly before it impacts the lower-income group who will be hardest hit when congestion worsens by 2030.

The JICA study already factored in the identified projects under the short-term program (2014-2016) with total investments of P520 billion.

“The study shows possible ideas, technologies, and strategies that can help the Philippines address traffic congestion and air pollution in Metro Manila. JICA hopes to work with the government in implementing some of these ideas to help improve mobility, and the quality of life of people in Metro Manila, and its surrounding areas,” said JICA Philippines Senior Representative Eigo Azukizawa.

Preliminary analysis in the study showed that the average low-income group households have to 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 times higher.

Among the strategies listed in the JICA study at the regional level are spreading economic activities to other potential growth areas including balancing development of agriculture, manufacturing, and services, protecting prime agricultural areas for food security, avoiding urban sprawl in hazard risk areas, promoting growth of regional centers, strengthening connectivity, and improving public transport services, and logistics.

The roadmap emphasizes the need to establish better north-south connectivity and appropriate hierarchy of different transportation modes such as roads, railways, and other mass transits.

This forms the “Dream Plan” to have a modern, affordable, and a well-coordinated and integrated transport system for Mega Manila by 2030. The roadmap also recommends planned and guided urban expansion to adjoining provinces through an integrated public transport, affordable housing for low-income groups, retrofitting of existing urban areas in integration with public transport, expanding multi-modal public transport network, and strengthening traffic management systems.

“Efficient public transport system is a pro-poor investment as it provides reasonable ways of moving. As well, it enables people to commute from suburban areas where one can afford housing in a more spacious and safer area,” added Azukizawa.

One of the innovations proposed in the study was implementing a so-called “Intelligent TransportSystem” or ITS to maximize the city’s existing road capacity.

ITS, the study noted, includes better traffic engineering and management that requires geometric improvements, pedestrian facilities, traffic surveillance, accident prevention, traffic safety education, and traffic enforcement. An example of ITS, as discussedin the study, requires a signal control system, travel time prediction, road maintenance, intelligent parking, incident detection, and bus scheduling assistance among others.

By putting modern technology and discipline into traffic management, the JICA study said the Philippines can make better use of available infrastructure.

In terms of social impact, the JICA study said that with interventions, it is likely that the average transport fare of P42 by a commuter today will be reduced to P24 due to improved connectivity and common fare. Travel time is also likely to be reduced from 80 minutes per trip to 31 minutes.

“By alleviating traffic, the Philippines can have more space for dynamic business and investment growth, and encourage economic activities in other areas outside Metro Manila in a sustainable way,” said Azukizawa.

source:  Manila Bulletin

PH wins another investment upgrade

The Philippines has secured another investment grade status, this time from a Korean rating agency National Information and Credit Evaluation (NICE) Ratings Inc., the government’s Investor Relations Office (IRO) announced.

In a statement, the IRO said yesterday that the latest rating action by NICE Ratings is anchored on its assessment that the Philippines is seen poised to sustain the nation’s economic gains it has achieved over the last few years.

For the first time, NICE placed the Philippines in the investment status, raising the country’s long-term, foreign-currency rating by a notch from junk to the minimum investment grade of BBB-, with a “positive” outlook, indicating probability of another upgrade within the short term.

“The outlook is positive. It reflects the improved growth potential backed by institutional reforms and greater investment in infrastructure,” NICE Ratings said in its latest report on the Philippines.

The South Korean institution’s decision joins other major international ratings agencies Fitch Ratings, Japan Credit Rating Agency, Moody’s Investors Service, R&I, and Standard & Poor’s in saying the Philippines is an investment grade nation.

Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. and Finance Secretary Cesar V. Purisima both said the NICE Ratings upgrade signalled the country’s economic strengths, which have become difficult to ignore by the international community.

Purisima said this vote of confidence acknowledges efforts to ensure the country is able to sustain improvements in the economy over the long haul.

“As far as the BSP is concerned, the latest investment grade is another acknowledgment of efforts to maintain an inflation environment and a financial system conducive for business and supportive of sustainable growth,” Tetangco said.

NICE Ratings expressed belief in the ability of the Philippines, which grew by 6 percent in the first semester, to sustain robust economic growth, citing government efforts to boost the manufacturing sector and to invest heavily in infrastructure.

“In order to break away from the private consumption-led growth and pursue a new growth model jointly led by investment and consumption, the government promoted manufacturing while making it a priority to enhance public governance and infrastructure,” it said.

Manufacturing, said to have a high multiplier effect on the economy, grew by an average of 7.9 percent from 2010 to 2013. This outpaced the 6.7-percent growth for the services sector, NICE Ratings cited.

It also highlighted the government’s infrastructure-development agenda, under which public spending for infrastructure is targeted to grow from an equivalent of 3 percent of gross domestic product (GDP) this year to 4 percent next year and 5 percent in 2016.

Meantime, NICE Ratings likewise credited the Philippines for its strong external liquidity, stable financial markets, and much improved fiscal situation.

“In the face of the sell-off of financial assets in emerging markets since May 2013, the Philippines’ financial market remained relatively stable, thanks to the strong current account position and abundant liquidity in the financial market,” it said.

NICE Ratings said debt management was sound, with the central government’s outstanding debt having declined from a peak of 74.4 percent of GDP in 2004 to 49.2 percent last year.

It also said the BSP is properly managing inflation, citing recent adjustments in monetary policy setting and new regulations to prevent price bubbles in the real estate sector.

Prior to this upgrade, the last credit-rating action from NICE Rating was done in February 2013 when it adjusted its outlook on the previous rating of BB+ from “stable” to “positive.”

source:  Manila Bulletin

Case against MRTC to be filed within the year

THE PHILIPPINE government will file a case “within the year” against the Sobrepeña-led Metro Rail Transit Corp. (MRTC) which supposedly could have averted MRT-3 congestion and commuter agony by purchasing additional coaches more than ten years ago.

But transport officials have refused to say exactly when that case will be filed, adding that they are in the process of studying “violations” committed by the company.

“If we have enough basis, yes...[we will file the case] definitely within the year,” Department of Transportation and Communications (DoTC) Undersecretary Jose P. Lotilla said in an interview on Monday.

Mr. Lotilla made these remarks after providing testimony during a Senate hearing regarding the MRT-3, the train system on the Philippines’ busiest highway.

MRTC owns the assets of the railway line under a 25-year build-lease-transfer agreement, which requires government to pay an annual P7-billion fee in equity-rental costs for the state to run the trains.

During the Senate sub-committee hearing on MRT, Senator Francis Joseph “Chiz” G. Escudero grilled officials for their inaction in protecting the interests of the government in the MRT-3 project and allowing the private company to shortchange the government and the riding public.

Mr. Escudero said legal action should have been taken against the MRTC for having been in default in its responsibility to purchase additional train coaches for the MRT-3 to decongest the system.

To increase capacity, DoTC officials said, the MRTC should have purchased additional train coaches in 2003.

However, MRTC has failed to expand the mass transport system and even took legal action against the DoTC after it purchased 48 additional train coaches for MRT-3.

As a result, the MRT has been forced to serve 500,000 commuters daily, above its 350,000 capacity.

“The MRTC has not been doing its side of the contract for the past 11 years, why has not the government through you sued them to comply or you have made any legal move to terminate the contract instead of us paying P50 billion for their lapses and blunders?” Mr. Escudero pointed out during the hearing.

Average loops or round trips of trains per month dropped to 6,338 in July 2014 from 6,585 in 2011, MRT-3 Operations Director Renato Z. San Jose said during the hearing.

Service disruptions have increased to four on the average per month compared to only 1.83 train stoppages in 2008, Mr. San Jose said.

As of July 2014, ticket issuing machines that broke down have reached 832 from only 774 in 2011.

Service disruptions and defective equipment have prompted DoTC Secretary Joseph Emilio A. Abaya to ask for P740 million in the supplemental budget for the overhaul of the MRT-3.

Among the MRT-3 proposed rehabilitation projects are as follows:

Train General Overhauling: P1.155 billion; Ancillary Systems Upgrade: P870 million; Platform edge doors: P250 million; Signaling system upgrade: P184 million; Rain steel replacement (500 pieces): P119 million; Communication system upgrade: P110 million; Traction motors replacement: P94 million; Overhead catenary system: P89 million; and Security fence and noise barrier: P75 million.

For his part, Senator Paolo Benigno A. Aquino IV has considered the MRT-3 as “a failed public-private partnership (PPP).”

Meanwhile, two Palace officials on Monday took the challenge to ride the MRT during rush hours.

Deputy Presidential Spokesperson Abigail F. Valte took to her social networking account [Twitter] to document her experience saying that she rode the train at the North Avenue station at 8:24 a.m., after 40 minutes of waiting, and arrived at the Taft Avenue station by 9:41 a.m.

According to news reports, Ms. Valte was with Presidential Spokesperson Edwin S. Lacierda when she took the train.

Last week, Senator Grace Poe-Llamanzares also rode the MRT, in preparation for the upper chamber’s probe on the system’s deficiencies. -- Ailyn D. Galura and Chrisee Jalyssa V. Dela Paz

source:  Businessworld

SM Land merging reclamation projects for 600-hectare CBD

SM Land, Inc. plans to integrate its reclamation projects in the cities of Pasay and Parañaque to develop a 600-hectare central business district (CBD) worth more than a hundred billion pesos, senior officials of the company’s parent told reporters yesterday.

SM Land has contracted international engineering firm Aecom Technology Corp. to draft the master plan for the development at the Manila Bay area, and expects to have a plan within the next three to six months.

The Parañaque and Pasay project areas measure 300 hectares each, with reclamation work alone expected to take three to five years to complete, SM Prime Executive Vice-President Jeffrey C. Lim said after the listing ceremony in Makati City of the company’s P20-billion retail bonds.

SM Prime has become the holding company of SM group’s real estate businesses as a result of consolidation last year.

“The cities have contracted us... and they will have to secure approval and (follow) the process including endorsement from the PRA (Philippine Reclamation Authority) all the way to NEDA (National Economic and Development Authority). We’re just waiting,” Mr. Lim said.

SM Prime President Hans T. Sy said in the same venue that the group is “trying to build a future city” in the area.

“Preferably, we would like the project to be integrated so the outcome will be better. We’re working with them (Aecom) very closely -- we give them the ideas we want -- we now have to justify the whole design, including putting into consideration all the environment issue and climate change issues. All issues should be addressed,” Mr. Sy said.

SM Land previously said it intended to develop the reclaimed land into “a world-class, mixed-use district for business, commercial, and entertainment.”

Asked for comment, Antonio Sabarre, Jones Lang LaSalle associate director for Markets, said in a phone interview: “We encourage a new area of development. It’s good for the industry and for the Philippines so we can try and make more CBDs to encourage more investors to come to Manila.”

“It takes a while for the reclamation to be finished, so we hope that when it’s done, there will be more office spaces and roads to build. It widens Metro Manila, in a way,” he said.

On Aug. 13, the Public-Private Partnership Selection Committee of Parañaque City endorsed to Mayor Edwin L. Olivarez SM Land’s unsolicited proposal for its reclamation project.

BONDS UPSIZED
In a statement released also yesterday, SM Prime said it has upsized its maiden bond offering to P20 billion from the initial size of P15 billion, citing “strong demand” from investors.

The issue consists of 5.1000% Series A bonds due 2020, 5.2006% Series B bonds due 2021 and 5.7417% Series C Bonds due 2024.

“The bonds were purchased by a wide spectrum of investors ranging from individuals in the retail market to banks, investment funds, pension funds, insurance companies and other corporate,” the statement read.

The offer period ran from Aug. 13 to Aug. 22, while the issue date was yesterday.

SM Prime has earmarked P60.9 billion in capital expenditure for projects this year, of which P30 billion will go to malls, P24.5 billion for residential, P3.2 billion for commercial, and P3.2 billion for hotels and convention centers.

On Monday, shares of the company gained 30 centavos or 1.85% to close at P16.48 apiece from Friday’s P16.18 finish.

source:  Businessworld