Ortigas & Co. to build RP’s tallest structure; expansion plan bared

Vol. XXII, No. 26 [ BusinessWorld Online ]
Monday, September 1, 2008 | MANILA, PHILIPPINES

PROPERTY DEVELOPER Ortigas & Co. Ltd. Partnership is erecting in Pasig City what it hopes to become the country’s tallest building.

The 75-storey structure will rise on a one-hectare property in Ortigas Center, Deputy Chief Operating Officer and Shopping Center Division Head Joselito F. Santos said in an interview last week.

One Galleon Place will become the country’s tallest building, beating the 52-storey PBCom Tower in Makati and the world’s eighth tallest building, the 69-storey Shun Hing Square in Shenzhen, China.

Mr. Santos said the skyscraper would be divided into two portions — the upper half dedicated to a five-star hotel and the lower half for office units.

No date has yet been given for the project. "It is in the plan. As of the moment, we are still concentrating on our other projects," Mr. Santos said.

The Ortigas group also plans to start the second phase of renovating Greenhills Shopping Center in San Juan by 2010, as it adds at least 50,000 square meters more to its 100,000-square meter floor area.

"We plan to have a bigger Greenhills [by setting up] new buildings and having better amenities. We plan to invite brands like Mango and Zara although we are not going high-end with our stores," Mr. Santos said.

The company also wants to widen the space of the mall’s bazaars, which he said gives Greenhills its unique identity.

Aside from expanding Greenhills, Ortigas & Co. is also expanding the Music Museum by 2010 so it can have up to 1,000 seats where plays, concerts and other performing arts can be held. Construction will start next year, Mr. Santos said.

Like other property developers that have diversified into the outsourcing industry, Mr. Santos said the company would start the construction of two of four business process outsourcing (BPO) buildings at Tiendesitas in Pasig by the fourth quarter.

The company earlier disclosed a plan to build four BPOs at the Tiendesitas complex to take advantage of the growing demand for office units from the outsourcing industry. "Demand is still strong," he added.

The four-storey BPO buildings will stand on a 20,000-square meter property. The first two buildings are expected to start operating by the first quarter of 2010.

"We hope to start the construction of the third and fourth buildings by the middle of next year," Mr. Santos said.

"The BPOs will not compete with the residential buildings although they have become a bigger component of the company’s business portfolio," he added.

The company earlier said that it was spending P15 billion over the next decade to convert a 12-hectare property in Quezon City into a mixed-use community.

The project, which will target the middle-income market, will consist of residential condominium units and townhouses.

It will have 5,000 units in low- and high-rise buildings, with price tags ranging from P2.5 million to P3 million per unit.

The first phase of the project will involve the construction of five buildings this year. — K.J.R. Liu

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Quezon Memorial Circle redevelopment underway

By: Cory Martinez
[ journal.com.ph ] September 1, 2008

THE redevelopment of the Quezon Memorial Circle is now underway with the preparation of a master development plan that would transform it into a world-class park.

This developed as Mayor Feliciano Belmonte, Jr., has ordered for the maximum use of the park by making it as the center of activities by the city government.

During a regular executive staff meeting at the QC Hall, Belmonte ordered different heads and chief’s of offices to submit proposed activities to be held in the 26-hectare QMC.

The QC government has commissioned the services of the world-renowned Palafox and Associates to prepare the master development plan.

The city government has started undergoing facelift of the park after the QC Parks and Development Foundation has turned over its management last July 1, 2008.

Belmonte vowed to pour in P200 million for the redevelopment of QMC, which is considered to be the heart of Quezon City.

The city mayor also directed QMC Administrator and Secretary to the Mayor Tadeo Palma to initiate measures to eliminate the reported petty crimes such as robbery and quickie sex activities in the area during nighttime.

Likewise, Belmonte ordered city Health Officer Dr. Antonietta Inumerable to send health workers to the area to check for possible dengue fever carrying mosquitoes’ breeding places within the Quezon Memorial Circle.

Palma, on the other hand, said that the redevelopment of the circle would include the construction of an underpass from the Commonwealth Avenue side, the renovation of existing park structures, installation of see-through fences and lighting up the entire QMC.

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Ayala Land warns of continuing price increases

Monday, September 01, 2008 [ manilatimes.net ]
By Katrina Mennen A. Valdez, Reporter

Ayala Land Inc. (ALI) may continue increasing its prices up to the end of the year given the soaring prices of construction materials, its executives said.

Jimmy Ysmael, senior vice presi­dent and chief finance officer, said in a phone interview that double-digit increase in the prices of their projects may be expected for the rest of the year as prices of steel and cement have gone up.

“The increase is actually project specific, so it varies,” Ysmael added.

He said ALI is making the move gradually and on per project basis.

Alfonso Reyes, corporate spoke­­­person, averred the price increase is ongoing in a bid to mitigate its losses.

“It is difficult to give the average increase, but it ranges from 10 percent to 15 percent. However, some projects could have lower increases,” Reyes said.

Earlier, ALI’s President Jaime Ayala said the company has remained bullish about completing its ongoing projects within this year, amid the soaring prices of construction materials.

ALI has an estimated 100 ongoing projects this year.

“[We] do not see any project delays to take place this year, despite the fact that the prices of basic construction materials have gone up significantly,” Ayala said.

As of this month, the price of iron ore, which is the based material for steel stood at $213 per ton against the same period last year when it cost only at $147 per ton, making local steel to soar by an average of 50 percent owing to strong demand from China and India.

In June this year, iron ore hit its highest at $262.5 per ton versus $119 a ton in the same period last year.

Ayala said the price of steel already doubled, while cement increased by 25 percent.

“So far, [we] do not have a problem on cement since [we] have a locked-in contract with [our] suppliers. On the other hand, it is difficult for us to win a locked-in contract with steel makers,” he said.

Ayala said that in a span of one and a half years, the selling price of their condominium units, among others have already surged by 20 percent due to the soaring prices of basic construction materials.

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Bernabe: GK making dreams come true in Parañaque

Monday, September 1, 2008 [ philstar.com ]

Mayor Florencio Bernabe Jr’s efforts to provide decent homes for its informal settlers and low-income families in partnership with Gawad Kalinga and the national government is making a lot of dreams come true in Parañaque City.

For the last three years, more than 2,000 houses have been built to shelter those who used to be called informal settlers who live difficult lives because they do not have roofs above their heads and homes they can call their own.

Bernabe, in an interview, proudly told The Star yesterday of how the city government’s zero slum dweller program is working wonders and changing lives.

At present, he said there are about 30 Gawad Kalinga housing projects in Parañaque for hundreds of families who will only be paying P600 to P700 in monthly amortization for the next 20 or 25 years. “What we do here is that we provide the land by giving beneficiaries loans from the city government or from the National Housing Authority,” Bernabe said.

“Once there is already a place to build, Gawad Kalinga, with their benefactors and sponsors, provide the means and materials to build. They have this bayanihan way of building the houses themselves,” he said.

After Gawad Kalinga villages are built, Bernabe said the city government gives residents more by providing site development projects for roads, drainage systems, basketball courts, pathwalks and the likes.

Parañaque has so far spent about P58 million for its housing programs which will, in time, be returned since beneficiaries do pay the land their homes were built.

Major Gawad Kalinga project areas in the locality include the Mangagayahn Kawayanan in Barangay Marcelo where some 800 units have been erected, Barangay Don Bosco where there are some 900 to 1,000 units, Malacanang Village dulo, and El Dorado Villa dulo.

Bernabe said the city government’s team up with Gawad Kalinga, a social ministry of Couples For Christ, is dramatically transforming the locality.

“Crime rates go down in areas where informal settlers used to be,” he said lauding Gawad Kalinga’s values formation programs for its beneficiaries.

He said he is also thanking subdivision dwellers like those living in Parañaque’s Marcelo Green Village for providing road rights of way for the little decent communities that they build. – Michael Punongbayan

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Cyber Bay plans residential subdivision along Mla Bay

By Zinnia B. Dela Peña
Monday, September 1, 2008 [ philstar.com ]

Cyber Bay Corp., a company headed by San Miguel Corp. president Ramon S. Ang, is planning to transform a property along Manila Bay into a residential subdivision and district for small and medium enterprises.

Ang said that once the issues involving the controversial Manila Bay reclamation project have been resolved, Cyber Bay will move to convert the 750-hectare property along Manila-Cavite coastal road within the cities of Paranaque, Las Piñas and the municipality of Bacoor, Cavite into an integrated and comprehensive urban township .

The project was pursuant to a joint venture agreement entered into by CyberBay with the Philippine Reclamation Authority involving the It was put on hold after Central reclamation of land along Manila Bay. Bay got into a legal tussle with the government involving the ownership of the reclaimed land.

In 2002, the Supreme Court declared the JVA illegal, saying the transfer of ownership of land to CyberBay subsidiary Central Bay Amari Coastal Development Corp. was unconstitutional because private corporations cannot own reclaimed lands.

Ang, said the Supreme Court ruling was unfair as it exempted other companies that acquired reclaimed lands.

He said Cyber Bay is pursuing its claims with the PRA for reimbursement of all costs related to the project amounting to P10.23  billion.

 CyberBay has spent a considerable amount on the project which continues to be charged with interests.

Due to the cessation of the project, CyberBay failed to honor its loan commitments and incurred significant losses from accumulating Last year, the company had accumulated interests and penalties. P9.4 billion. deficit of

In documents filed with the SEC, CyberBay said it still intends to continue its operations and utilize reimbursements that it may obtain from the PRA to fund other business and development ventures.

“The ability of the company to continue as a going concern will depend on the recoverability of the claims for reimbursement and on the success of any business that it may undertake,” CyberBay said.

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Appeals court stops realty tax imposition on Bataan ecozone

Vol. XXII, No. 26 [ BusinessWorld Online ]
Monday, September 1, 2008 | MANILA, PHILIPPINES

THE PHILIPPINE Economic Zone Authority (PEZA) is not liable to pay real property taxes for its economic zone in Bataan, the Court of Appeals said.

As a consequence, the appellate court set aside the P110.5-million deficiency tax assessment and subsequent collection proceedings against it by the local government of Bataan.

The appellate court did not categorically say if the ruling is one that is of general jurisdiction — or applicable to all ecozones under PEZA.

In a 12-page decision penned by Associate Justice Marlene Gonzales-Sison, the 11^th division of the appellate court overturned the ruling of the Pasay trial court that favored Bataan’s government.

"After conscientiously weighing the merits of the arguments of the parties, we find sufficient grounds to rule that respondent judge acted with grave abuse of discretion in issuing the assailed orders," it said.

Prevailing laws support the fact that PEZA is indeed exempt from paying the real property taxes, it added.

The issue stemmed from the demand letter sent by the provincial treasurer to the agency in May 2003, assessing it of tax deficiencies worth P110.5 million for the lots located at the Bataan Economic Zone.

PEZA sought suspension of the billing, pending resolution of a separate petition with the same trial court that asked clarification on its supposed exemption from real property tax liabilities.

The local government, however, proceeded to issue a warrant of levy and a subsequent "notice of sale of real property" scheduled for October 17, 2007.

The trial court later favored the local government in dismissing the petition for injunction filed by PEZA.

The agency thereafter raised the case before the appellate court, which in turn issued a stay order.

The local government claimed it received a copy of the stay order a day after the scheduled bidding, after which it took over the assets after failing to attract bidders.

The appellate court nullified Bataan’s tax assessment, notice of tax delinquency and the auction.

In its decision, the appellate court noted that the predecessor of PEZA, the Export Processing Zone Authority, was exempted from paying "all taxes, franchise taxes, realty taxes, and all other kinds of taxes and licenses to be paid to the National Government, its provinces, cities, municipalities," as provided under Presidential Decree No. 66.

This decree is the same blueprint used in the drafting of Republic Act 7916, or the Philippine Special Economic Zone Act, it said.

While RA 7916 did not explicitly exempt PEZA zones from real property taxes, a clause in that law provided that all privileges granted to special economic zones under RA 7227, or the Bases Conversion and Development Act, should apply to PEZA zones. RA 7227 specifically provided that no tax, whether national or local, should be imposed on special economic zones.

An amendment to the PEZA Law later provided that, "except for real property taxes on land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ecozone."

The appellate court stressed that Bataan could not consider PEZA as "a developer."

"This must be interpreted as due to private developers of economic zones and cannot pertain to PEZA," the appellate court ruled.

PEZA, in fact, is an "instrumentality of the national government," it stressed.

Another law, Republic Act 7160 or the Local Government Code, provides that a national government agency is exempt from paying real property taxes, the appellate court added.

"Consistent with our ruling that PEZA is exempt from paying real property taxthe assessment notice of delinquency the auction saleand the certificate of saleare all nullified," it said. — I. P. Pedrasa

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Investors eye Davao retirement villages

Vol. XXII, No. 26 [ BusinessWorld Online ]
Monday, September 1, 2008 | MANILA, PHILIPPINES

TWO EAST ASIAN firms are putting up retirement villages in Davao City. Japanese business process outsourcing (BPO) firm Meno Gaia Corp. is expanding by building a retirement village in the city, while Korean Good Morning Co. might develop a 10-hectare area for a mixed-use hotel and residential project.

Meno Gaia is looking at existing dormitories or raw sites in Davao near medical facilities, the Trade department said in a statement. The firm runs architecture consultancy and English training BPOs in the city.

Meanwhile, Korean investor Good Morning Co. is expected to start construction of its mixed-use project in Buhangin, Davao City, within the year. Both investors may register with the Philippine Retirement Agency (PRA) to get incentives and promotion assistance. The PRA earlier said the Philippines can support one to three million expatriate retirees remitting $18 billion-$54 billion annually. — J.A.D. Hermosa

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Ilocos lawmaker raps colleague over ecozone bill

By Myds Supnad
Monday, September 1, 2008 [ philstar.com ]

VIGAN CITY – Rep. Ronald Singson of the First District of Ilocos Sur accused the other day Antique Rep. Exequiel Javier of allegedly blocking his bill to establish the Ilocos Sur Special Economic Zone and Freeport Authority (ISSEZPA) that will improve economic development and generate thousands of employment in this province.

“Instead of supporting the economic programs of the country for the benefit of the people, they (critics) are instead trying to block it,” said Singson.

Singson, son of former Ilocos Sur Gov. Luis “Chavit” Singson, said that his critics should give his proposal a chance before accusing it (proposal) of various unfounded if not ludicrous reasons.

Rep. Singson lost his temper when Rep. Javier, chairman of the House Committee on Ways and Means, allegedly tried to suppress his economic development program for the Ilocos during the committee’s meeting last Tuesday night.

Singson complained that Javier was against his proposal arguing that the economic zone could be a haven for smuggling.

“I got angry and I challenged him (Javier) to file a bill to control smuggling and not block the development of Ilocos,” Singson said.

He said the members of the House Committee on Economic Affairs that have already conducted a hearing at the Salomague Port in Cabugao, Ilocos, where the proposed economic zone will be established, have already approved the bill that would provide economic benefits and employment to thousands of residents.

“In view of the declining tobacco industry, the main source of income in the province, there is a need to immediately approve this program to alleviate the plight of the Ilocanos,” pointed out Singson.

Singson said that he did not plan the economic zone for smuggling but for the creation of.

He pointed out that several foreign investors from China, South Korea, Hong Kong, Japan and other nations have already expressed their interest to invest in the proposed economic zone.

The said economic zone was a brainchild of former Gov. Singson when he was still a congressman and governor of this province.

The young Singson expects that around 10,000 jobs will be generated once the economic zone is in full operation.

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FELI profit triples in Q1

Sunday, August 31, 2008 [ philstar.com ]

Fil-Estate Land Inc. (FELI) posted a net profit of P51.02 million in the first quarter of its fiscal year ending March 2009, more than three times the figure reported in the same period a year ago, the company said in a statement.

Revenues rose 14 percent to P184.68 million in the period April to June this year, from P162.14 million the previous year, while realized gross profit jumped four fold to P122 million from a meager P29.75 million due to lower operating expenses.

In the nine months ending June this year, Fil-Estate’s net earnings amounted to P74.82 million, up 133.8 percent from P32 million. Revenues, however, fell 11.76 percent to P315.03 million.

Meanwhile, operating expenses dropped 3.87 percent to P91 million from P121.13 million.

The company’s sales of real estate and golf club and resort shares of P199 million came mainly from residential subdivision lots in Southwoods in Carmona, Cavite; Forest Hills in Antipolo; Riverina in San Pablo City; Monte Cielo De Naga in Camarines Sur; Newport Hills in Lian, Batangas; Goldrige Estate in Guiguinto Bulacan; Buenavista Hills and Windsor Heights in Tagaytay City; and from townhouse units in Cathedral Heights in Quezon City.

Income from contract services of various golf course maintenance contracts and rental of office block Renaissance Towers amounted to P 115 million.

As of end-June 2008, Fil-Estate had consolidated assets of P14.4 billion, 4.7 percent higher than the end-September 2007 level of P13.84 billion.

Retained earnings rose to P4.64 billion, largely due to the P74.8 million earnings for the third quarter ending June this year.

Fil-Estate said it is confident it could withstand the challenges of a difficult business environment given the continued strong performance of the real estate estate sector. — Zinnia B. Dela Peña

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SEC okays City & Land P200-M comm’l papers

Sunday, August 31, 2008 [ philstar.com ]

The Securities and Exchange Commission has approved the application of City & Land Developers Inc., a member of the Cityland Group, to issue P200 million worth of commercial papers to fund its working capital requirements.

City & Land is primarily engaged in real estate development and has completed office and residential condominium projects in Ortigas Center, Pasig City and Malate City, as well as a residential subdivision in Paranaque City consisting of single-detached, duplex and townhouse units.

An existing project is the Grand Emerald Tower, a 39-story commercial, office and residential condominium located at the corner of Emerald, corner Ruby and Garnet streets in Ortigas Center in Pasig City.

For its new project, City & Land is building Manila Residences Bocobo, a 24-storey office and residential condominium with a net saleable floor area of about 18,500 square meters. The project is located in Bocobo st., Ermita, Manila.

City & Land posted a net income of P118.57 million last year, down 35.43 percent from the P183.62 million reported in 2006, due to lower revenues. The Pacific Regency condominium which had a high sell-out and completion rate in 2006 of 91.93 percent and 88.94 percent, respectively accounted for the previous year’s higher revenues on sales of real estate.

As of end-2007, Pacific Regency was 99.79 percent sold and 100-percent completed. Since this project was almost sold out, the Ortigas condominium project, Grand Emerald Tower, started to moderately contribute to the firm’s sales. Sell-out rate and percentage of completion of this project reached 14.54 percent, and 17.5 percent respectively. — Zinnia B. Dela Peña

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DENR slams cutting of trees in Intramuros

Sunday, August 31, 2008 [ philstar.com ]

The Department of Environment and Natural Resources (DENR) criticized the cutting of trees in front of the Manila Cathedral in Intramuros, Manila.

“We condemn the mindless and arrogant action of the contractor and workers of a construction company who were engaged by the officials of the Intramuros Administration for the redevelopment of the area,” DENR National Capital Region director Corazon Davis said in a statement.

She said the contractor, construction firm, and Intramuros Administration officials may be charged with violating Presidential Decree 903, which imposes penalties and prescribes imprisonment for damaging or cutting trees.

Davis said officials of the Intramuros Administration earlier sought DENR’s permission to cut 27 trees in front of the Manila Cathedral for landscaping and development.

She said the DENR acceded to the request and issued a “tree cutting and balling permit” to Intramuros Administration chief Marie Ana Harper.

Davis alleged that several conditions prescribed in the permit “were simply ignored.” She said the Intramuros Administration failed to observe an explicit prohibition on the cutting of narra trees, which must be balled and transferred to any appropriate site in Intramuros; issue public notice and notify the area’s barangay council about the tree-cutting; and inform the DENR when the cutting will be undertaken so that experts from the department can provide technical advice on the balling of the narra trees.

“Those trees were certainly part of our heritage,” Davis said. “They were mute witnesses to momentous events that transpired in the Walled City and deserve the same care… accorded to structures and artifacts in the Intramuros area.” – Perseus Echeminada

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Viaduct dwellers up for relocation

[manilastandardtoday.com ] August 30-31, 2008

Some 160 families living under the 4.8-km Candaba viaduct along the North Luzon Expressway have been warned of the dangers that continue to stalk them unless they are relocated to a safer locality.

This took place during a series of dialogs with the affected families conducted recently by the Manila North Tollways Corp., builder and concessionaire of the 84-km expressway.

MNTC officials, assisted by local barangay leaders, informed the residents that they have no security residing under the viaduct, especially during flashfloods that could inundate the entire communities without warning.

A worse-case scenario would be the collapse of the bridge due to strong earthquakes, possibly burying the hapless residents under tons of concrete and twisted steel.

The MNTC officials noted that the viaduct folk usually keep piles of combustible materials such as hay, scrap woods and dried twigs and branches that could easily catch fire, thus posing serious threats to their own lives.

Recently, a wayward trailer jumped off the viaduct after colliding with a van, then rolled menacingly towards the colony of shanties under the bridge. It stopped short of running over the lean-tos, avoiding injuries or death to the residents.

The dialogs also sought to gather important data that could help draw up a resettlement program for the affected families.

MNTC officials gave assurances that the safety and welfare of the residents are also their major concern.

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DENR strictly guarding watershed forest reserves

[ Manila Bulletin Online ] August 31, 2008

BUTUAN CITY – The environment preservation and forest protection campaign of Department of Environment and Natural Resources (DENR) went into high gear as field officers were directed on Friday to be "on guard" on the 753,700 hectares watershed forest reserve spread all over Central Mindanao region.

Central Mindanao DENR regional executive director Jim O. Sampulna, also ordered all regional staff, division heads, Provincial Environment and Natural Resources Officers and Community Environment and Natural Resources Officers to go out and help forest rangers in watching the 25 identified watershed forest reserves against "rapists" of the remaining forest cover in the region.

The region’s environment and forest chief also ordered field personnel to closely coordinate with the local government units, non-government organizations, religious groups, academe and farmers in the massive tree planting activities which is one of the priority agenda of President Arroyo’s "tree for life" program.

Recently, Pres. Arroyo constituted the Task Force on Mindanao River Basin Rehabilitation and Development headed by Cotabato Archbishop Orlando B. Quevedo.

"Continuous tree planting is a very vital component in averting flooding problem in our region," said Sampulna.

Meanwhile, Sampulna also directed his field officials to set aside a day each week for holding of a "People’s Day" as part of a nationwide effort to provide the people with better access to government. (Mike U. Crismundo)

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Businesses boom in Caraga

[ Manila Bulletin Online ] August 31, 2008 ]
By MIKE U. CRISMUNDO

DTI grants P169.65 M loans to 18,844 micro entrepreneurs

BUTUAN CITY – Economic activities in Northeastern Mindanao (Caraga region) went into high gear as micro entrepreneurs were able to access some P169.65 million loans from the Department of Trade and Industry’s (DTI) Rural Micro Enterprise Promotion Program (RuMEPP).

Data gathered from the regional office of DTI also disclosed that about 18,844 micro entrepreneurs were recipients of the RuMEPP program.

RuMEPP is a seven-year poverty alleviation project of the International Fund for Agricultural Development (IFAD) based in Rome, Italy and the government of the Philippines with the DTI as the lead agency and the United Nations Office for Project Services (UNOPS) as cooperating institution.

The objective of the program is rural poverty reduction through increased economic development, job creation and rural incomes for 200,000 poor rural households in 19 of the poorest provinces in the country.

The program has three components, namely: Microfinance Credit and Support, Micro Enterprise Promotion and Development and Programme and Policy Coordination.

Under the program’s Microfinance Credit Support Component, wholesale loans are provided to micro finance institutions (MFI) such as rural banks, cooperatives and non government organizations for lending to micro entrepreneurs through the Small Business Corp. (SBC), an attached agency of DTI.

RuMEPP loans are from the US$ 15 million IFAD funding which will be drawn by SBC over seven years at an annual average of US$ 2.14 million or P90 million (at P42:$ 1). SBC is committed to disburse in 2008 at least P100 million in IFAD-funded wholesale microfinance loans, and every year thereafter until the seventh year.

This year, SBC commits to move into the RuMEPP areas at least 70 percent of P70 million of the P100 million target disbursement.

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Expressway, La Union airport seen to boost Cordillera growth

[ Manila Bulletin Online ] August 31, 2008
By DEXTER A. SEE

BAGUIO CITY – The upcoming operation of the San Fernando airport in La Union and the immediate completion of the 84-kilometer Tarlac-La Union toll expressway will surely perk up tourism, agriculture, and economic development in Baguio City and the entire Cordillera.

The San Fernando airport is expected to resume flight operations by October, this year following the completion of the first phase of the half-billion-peso upgrading project funded by the Bases Conversion and Development Authority (BCDA).

The San Fernando airport is part of the Poro Point Freeport Zone being managed by the Poro Point Management Corp. (PPMC), a subsidiary of the BCDA.

The Tarlac-La Union Toll Expressway Project on the other hand, is being implemented by Department of Public Works and Highways (DPWH) and will be completed and is expected to be operational by 2011.

Johnny dela Cruz, president of the Baguio-Benguet Chamber of Commerce and Industry Inc. (BBCCII), said the overflowing development in the city which comes as a result of the completion of the vital infrastructure facilities would also benefit the surrounding communities such as the towns of Itogon, La Trinidad, Sablan, and Tuba, all in Benguet.

With the expected influx of investors in Baguio and Benguet and with the operation of the San Fernando airport and the Tarlac-La Union toll expressway, he said, employment will be provided to thousands of people and there will be sufficient opportunities for livelihood that would help uplift the living condition of families in urban centers.

The Tarlac-La Union toll expressway will be connected to the BCDA’s flagship project, the Subic-Clark-Tarlac Expressway (SCTEX).

The entire 94-kilomete SCTEX is now open for commercial operations. Recently, one of the country’s major bus companies, Victory Liner, started taking the SCTEX Clark-Tarlac route to Baguio, cutting travel time from six hours to four hours.

Aside from the reduced travel time, travel will be safer and more convenient as the buses need not take the narrower and sometimes unevenly paved national road. An added bonus for using the SCTEX is the considerable amount of fuel savings due to non-stop driving. It will only be a matter of time before other bus companies and cargo trucks will follow suit.

Dela Cruz said the provision of access is an integral part of the country’s tourism, agricultural and economic development, and SCTEX and the Tarlac-La Union toll expressway, which will be operational soon, would improve the delivery of goods to any part of Northern Luzon in a short time.

Moreover, locators in the economic zone here will now have alternatives in the use of transportation means to bring their products to Clark and Subic via the inter-connected expressways. They could opt to maximize the use of the San Fernando airport which is much nearer to the city. They could cut travel time and expenses in the transport of their products.

Tourism, agricultural, and economic development in Central and Northern Luzon is in an upbeat mood following the full operation of SCTEX.

The Clark-Tarlac segment of the SCTEX opened last July 25, while the Subic-Clark segment started commercial operation last April 28.

Dela Cruz said the development of surrounding communities that could come as a result of improved access will also benefit this city because people will drop by Baguio to enjoy its cool, romantic weather, pine-scented air, and natural scenery.

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Pampanga to benefit from RP as 3rd in outsourcing

Sunday, August 31, 2008 [ sunstar.com.ph ]

CITY OF SAN FERNANDO -- With the growth of its call centers at 52 percent in the past three years and over 3.6 billion dollars in estimated revenue, the Philippines is now the third outsourcing destination in the world and with this the potential benefit for the Pampanga information technology (IT) sector.

Commissioner Monchito Ibrahim of the Commission on Information and Communications Technology (CICT) issued this statement.

The commissioner explained that the country is the third, aside from China and India, as favorite destinations of IT and business process outsourcing (BPO) investors.

This, he said, was the result of the increasing number of manpower and the relatively low cost of production expenses in the Philippines.

In a report conducted by McKinsey Global Institute and in the Watson Wyatt 2005/06 report, the Philippines ranked second, next to India, in the hourly basis index on labor cost to employer.

The Philippines was followed by China and nearby Malaysia.

Ibrahim said the benefit of the new development translates to new job opportunities in the field of IT.

The areas of IT that are expected to need considerable amount of manpower are the call center sector, business processing, software development, animation and gaming, engineering and design process.

However, the CICT said Pampanga would need to address some issues that could directly affect development of IT in the province like the need to recruit over one million new people into the industry to reach 10 percent market share.

There is also the high percentage of top talents in emerging areas outbound to other markets (like nurses, engineering, and accountants) that do not necessarily fit the need of the market. Also, the mismatch in location density between providers and labor and the smaller labor pools that are not tapped

"Clear steps should be undertaken by local governments here to keep up with the emerging needs and demands of the IT sector," Ibrahim added. (IOF)

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Property boom expected to weather US meltdown

Vol. XXII, No. 25-A [ BusinessWorld Online ]
Saturday, August 30, 2008 | MANILA, PHILIPPINES

THE BOOM DAYS of the property market, which recovered from a contagion that hit Asia a decade ago, won’t have to end with another crisis sparked by a meltdown in the US subprime mortgage market, a local credit rating firm yesterday said.

Buoyant demand mainly from Filipinos working abroad and the baby-boomer generation entering retirement, as well as from the flourishing business process outsourcing industry, should keep the domestic property market afloat, said Danilo A. Antonio, managing director of Credit Rating and Investors Services Philippines, Inc.

"In general, we’re about to experience a slowdown, but we’re still pretty much in the boom situation," he told a forum of investors and analysts gathered at the Philippine Stock Exchange yesterday. The continued volatility in the global and domestic financial markets has so far failed to douse fears of a US-led crisis spilling over to emerging Asia, including the Philippines. The region has been battered 10 years ago by massive capital flight, that had constrained lending activities of banks heavy with foreclosed assets.

Banks have since disposed of soured loans, thanks to so-called special purpose vehicles that enjoyed tax perks from the government. Real estate developers won’t have then problems in terms of sourcing funding, Mr. Antonio said.

"Yes, [the US crisis] will continue. But it seems for now that there’s no direct impact as far as local markets are concerned," said capital markets expert Gamaliel C. Pascual, Jr., senior advisor at Regina Capital Development Corp.

Besides, the Philippine capital market’s funding mechanism is "primitive," having yet to explore the full benefits of the four-year old securitization law to issue the more complex mortgage-backed securities.

If at all, the US’ housing bubble impact on the Philippine housing sector could be felt in the weakening of the second home and luxury home market — mostly vacation homes and residential resorts, Mr. Antonio noted.

This kind of housing mainly catered to the Filipino-American market, whose preference has now shifted to cheaper housing products in the US mainland, he said.

Residential units, including low-cost housing and subdivision units whose prices are within a P1- to P2.5-million range, as well as similarly-priced condominiums and buildings designed for business process outsurcing, are hot items in this prevailing environment, Mr. Antonio said. Apart from vacation houses, farm lots, golf communities and industrial estates, have become unattractive, he added. — Maria Eloisa I. Calderon

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Replacement investment

Saturday, August 30, 2008 [ sunstar.com.ph ]

WHILE the number of investments in the country has increased recently, these merely replaced what had been lost.

Professor Ernesto Pernia of the University of the Philippines School of Economics made the observation while warning government against being complacent.

“There is a recent investment pick-up from the private sector, which is good.

But looking at it more closely, it’s more of a replacement investment that is making up for the depreciated investments in the past. It is not a net additional improvement in the economy,” said Pernia, during a talk last Wednesday at the University of San Carlos on the economy, and the food and fuel crises.

He said that since there are fewer investments, there are not enough jobs for about 1.2 million students nationwide who graduate every year.

Data at the National Statistics Office show that there were 2.9 million unemployed Filipinos in April 2008, or eight percent of the country’s population. The country’s unemployment rate as of April 2008 is higher than the 7.4 percent recorded in the same period last year.

Poverty

Pernia said that with low investment growth and higher unemployment, poverty incidence has gone up to 33 percent in 2006 from 30 percent in 2003, which indicate that two years ago, about four million Filipinos lived below the poverty line.

This makes the country’s economy more vulnerable to the global food and fuel crises, he said. Government’s lack of capacity to help boost private investment can be blamed for this vulnerability, he noted.

The National Statistics and Coordinating Board reported Thursday that the country’s economic growth in the second quarter of this year slowed to its lowest rate in three years as higher inflation hurt consumption and mining output contracted.

Gross domestic product (GDP) in the April-June quarter grew 4.6 percent from the same quarter a year ago. Growth in the first quarter was revised to 4.7 percent from an earlier 5.2 percent.

GDP growth—referring to the increase in the value of goods and services produced within the country—in the second quarter of 2007 was a much stronger 8.3 percent.

Slowest growth

Described as “uninspiring,” overall economic growth was considered the slowest since 4.4 percent in the first quarter of 2005.

“Achieving the full year target will be a tough challenge as we continue to face high food and oil prices,” Socio-economic Planning Secretary Ralph Recto told the AFP earlier.

Government has set a growth target of 5.5 percent this year, but Recto said that to achieve this, the economy has to grow by 6.4 percent in the second half of the year.

Pernia also warned against the ill effects of economic growth that is driven by consumption by those who receive remittances from overseas Filipino workers.

He said that too much dependence on overseas remittances can cause moral hazard problems like reduced work effort at the household level, government complacency regarding urgent policy reforms, brain and skill drain, and psycho-social costs.

“Dependency on remittances is neither good nor sustainable in the long run,” he said.

While presenting income of households that get OFW remittances from 2000 to 2006, Pernia pointed out that overseas remittances have “insignificant” impact on poverty; and even further widens the gap between the poor and the rich, compared to domestic remittances—money earned from local jobs—that manifest an “equalizing” effect among the poor and the rich.

This is why, he said, the government and the public should actively promote domestic employment and internal migration rather than overseas employment. (NRC)

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Solon files bill to turn Camotes Islands into tourism destinations

Saturday, August 30, 2008 [ sunstar.com.ph ]

THE development of the Camotes group of islands as tourism destination will come close to reality once the 14th Congress passes House Bill (HB) 1100.

HB 1100, which seeks to re-classify 60 percent of Camotes as alienable and disposable land, is now pending at the Senate for consideration, said Rep. Ramon “Red” Durano in a press conference last Monday.

Under HB 1100, the Camotes Lake covering 60 hectares and some 50 hectares of mangrove forests will remain protected.

Once HB1100 is passed into law, Durano said Camotes can then be “aggressively promoted” by the Department of Tourism to invite investors to help develop the area.

Camotes has been declared as a mangrove swamp forest reserve under Proclamation 2152 signed in 1981 by then President Marcos.

Foreign investors

Durano said there were several foreign investors who wanted to put up facilities in the Camotes Islands, but once they were informed that only tax declarations can be issued for the land they want to develop, they shy away.

“Tax declarations are not accepted by financial institutions for loan applications,” Durano said, adding that this is the same reason that even residents in Camotes have been reluctant to put up businesses that may support tourism in the area.

“The residents are all aware of the land situation. (But) once the Senate approves the bill, the residents can then apply for land titles based on the tax declaration they have,” he said.

Durano said basic infrastructure in Camotes is in place but he believes that more facilities need to be put up before the area becomes a tourist destination.

One of the problems, Durano pointed out, is the lack of facilities that can accommodate tourists.

He admitted that during the Suroy-Suroy sa Sugbo, the local government in Camotes had difficulties accommodating participants.

Durano said the bill has specified how the whole island will be developed. It also maps out which areas will be developed for residential and commercial uses. (DME)

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East Asian bizmen eye Davao as retirement haven

PIA Press Release
2008/08/30

by Prix D Banzon

Davao City (30 August) -- Japanese and Korean investors are considering sites in Davao City for retirement villages of their foreign nationals.

Teolulo Pasawa, Department of Trade and Industry city director for Davao City in an interview said that these investors are just validating the areas even as he said that they already had registered their businesses at the Securities and Exchange Corporation (SEC).

He said the Japanese investor still has to conduct ocular on the recommended sites where the basic requirement is accessibility to medical facilities.

The sites he said are areas with building for dormitory type or a raw site ideal for retirement villages.

The retirement village is an expansion of their existing business in Davao City of the Menogaia Corporation, a business process outsourcing business that caters to clients in Japan for designs and architecture and the English as Second Language where Davao Based instructors teach English on line to Japanese nationals.

Pasawa said they already have 100 workers for both the designs and architecture and the on-line language.

"Knowing the increasing cost of retirement facilities in Japan the investor had considered this investment as a big potential in Davao City," he said.

Meanwhile the Korean investor is looking at developing an area in Buhangin for a mix-use of hotel, retirement part and for residential areas.

He said the Good Morning Company has a 10-hectare area located in between Robinsons and Panorama Subdivision.

The company he said already will start construction within the year although he did not give details about the project.

He said the two investors also did not specify whether they already made arrangements with the Philippine Retirement Authority but he stressed that it would be an advantage if these proposed retirement villages be enrolled at the PRA so they gets the promotion to attract more clients. (PIA)

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Shang Properties to start Ortigas project

Vol. XXII, No. 25 [ Business World Online]
Friday, August 29, 2008 | MANILA, PHILIPPINES

LISTED SHANG PROPERTIES, Inc. will start a commercial and retail building project at its Ortigas Center property in Pasig City, the company told the stock exchange yesterday.

The project will be developed with subsidiary Shang Grand Tower Corp. The property developer provided no further details. Efforts to contact company officials were also unsuccessful.

In a report to stockholders in June, the company said it had three projects lined up this year — a $250-million luxury hotel in Fort Bonifacio, Taguig City, which the company expects to complete by 2012; the redevelopment of its 8.6-hectare Shangri-La Place in the Ortigas business district in Pasig, which is in the final stage of being completed; and the expansion of its mall by another 30,000 square meters. The company said it was optimistic about replicating its performance in the first half.

The property firm posted a P218-million consolidated net income for April to June, more than a third higher than a year earlier. First-half net profit was also up by more than a fifth to P407 million, with growth mainly driven by higher rental income and revenues from condominium units.

Formerly EDSA Properties Holdings, Shang Properties leases properties to Shangri-La Plaza Corp., where it has a 79% stake, and Edsa Shangri-La Hotel. Share prices of Shang Properties yesterday closed at P1.64 apiece. — Kristine Jane R. Liu

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Villar’s Sta. Lucia Land expects turnaround in third quarter

Vol. XXII, No. 25 [ BusinessWorld Online ]
Friday, August 29, 2008 | MANILA, PHILIPPINES
BY DON GIL K. CARREON

LISTED STA. LUCIA Land, Inc. expects a better third quarter as it books first-half sales following the transfer of assets from its parent company.

The Villar-led realty firm expects a net profit turnaround of about P100 million after posting a net loss of P176.54 million in the first half, Sta. Lucia Land Executive Vice-President Rolando Castro said in an interview after the company’s annual stockholders meeting yesterday.

He expects the company’s third-quarter gross sales to reach almost P800 million. Mr. Castro said the figures would include first-half sales that the firm had not booked in compliance with international accounting rules on asset transfers, as well as due to the implementation of a new operational system.

But these figures might still slide a bit with the implementation of new accounting regulations that prohibit booking of sales from uncompleted projects.

Sta. Lucia Land, which went public via a backdoor listing last year by acquiring inactive Zipporah Realty Holdings, Inc., recorded a net loss of P176.54 million in the first half due to taxes incurred from Sta. Lucia Realty Development, Inc.’s P10.72 billion worth of property infusion in exchange for 10 billion shares.

Mr. Castro said the effects of rising construction costs on Sta. Lucia Land has been minimal, noting that they had hiked property prices by only 5%.

He said the company’s main focus is horizontal development, where fewer building materials are required. "Our main market are [Filipinos working abroad] and their appetite for housing is still there," Mr. Castro told BusinessWorld.

Prince Christian Cruz, a senior economist at the Global Property Guide, is skeptical about the positive projections made by real estate firms, which he said might be making more money not because of increased demand but more due to higher prices.

Mr. Cruz said a better gauge of the performance of real estate firms is the number of units sold instead of profits and sales, which may have risen due to their price increases.

He also said he does not expect property companies that focus on subdivisions to avoid having to hike prices since these projects heavily use materials such as cement, gravel and sand, which have become more expensive due to higher transportation costs.

Sta. Lucia Land’s Mr. Castro said they have completed 15 projects worth P2.5 billion and has 16 more lined up until early next year. Among the projects being pursued in the first quarter of next year are two towers for business process outsourcing firms and two more for residential use at their 11. 5-hectare property in Cainta, Mr. Castro said.

The company also plans to expand the Sta. Lucia Mall. Mr. Castro said the projects would be partially financed by long-term borrowing and through the sale of more shares to the public in the first quarter of 2009, provided market conditions improve.

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Divisoria mall operator to build town homes on site

Friday, August 29, 2008 [ manilatimes.net ]

Divisoria’s newest mall, Benisons Shopping Center, on Thursday launched a town homes community which would be built on the topmost level of the mall.

Dubbed “The Top at Benisons,” the project would see 47 two-story townhouse units rise on the 5,972-square meter fifth floor of the shopping center.

“The Top at Benisons is the first of its kind in the Philippines—an exclusive town homes community on top of a mall, offering a real sense of space, in an area [Divisoria] where space is at a premium,” said Miguel Marco Bitanga, Benisons managing director.

According to Benjamin Bitanga, Benisons president, this added investment costs around P250 million.

Construction for this residential project would start next month, and would be ready for turnover by the fourth quarter of next year.

The Top at Benisons targets to sell mainly to businessmen, traders and entrepreneurs who would like to live within close proximity of their (business) operations in the Divisoria shopping district, the company’s managing director said.

He explained that quality living space has been scarce in the Divisoria area, forcing businessmen to reside elsewhere, such as in posh villages in Quezon City and San Juan.

The Top at Benisons hopes to cater to this upper class market looking for abode in the booming shopping district, he said.

The managing director said that unlike cramped condominium residences sprouting all over the area, this upcoming residential community would provide larger living spaces.

He said that Ayala’s Greenbelt residences are also attached to the mall, but The Top at Benisons is the only one with driveways and even built-in car garage.

Units range from two-bedroom 97.47-square meter lofts to three-bedroom 163.23 square meter houses.

The townhouses would be sold at P84, 000 per square meter, or an estimated P9 million to P12 million per unit.

Benisons Shopping Center started full operations in October 2007 and currently has about 350 retail stalls for various dry goods on the ground level. Puregold Supermarket is also slated to start operations in the mall by November, and would occupy some 30 percent of space on the first floor, the company president said.

Investment for the mall, including the upcoming residential project, would amount to P1.3 billion, he said.

He disclosed that they are also looking at constructing shopping malls with attached residential units in other areas such as Quezon City in the near future. --Ben Arnold O. De Vera

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Australian BPO may set up branch in Davao, but talent lacking

Vol. XXII, No. 25 [ BusinessWorld Online ]
Friday, August 29, 2008 | MANILA, PHILIPPINES

AUSTRALIAN-BASED business process outsourcing (BPO) operator Admerex is eyeing Davao City as the possible location of its second contact center in the Philippines, an umbrella group for outsourcing services said yesterday.

— BW file photo

Eriberto P. Barriga, Jr., vice-president for external affairs of ICT Davao, Inc., said in a statement the Admerex group had inspected the area as it plans to expand within the year.

Ces A. Sembrano of Admerex Philippines confirmed that the company was considering Davao for its second site. It has one contact center in Makati City with 500 agents. The expansion will require 500 more agents.

There are 18 call centers in Davao City operated by companies like Cyber City, Call Box, Sutherland and Western Wats.

"Their interest [in Davao] now is higher [than] two years ago," Mr. Barriga said. He said the increasing willingness of property owners to adjust to requirements of the information and communications technology sector has attracted investor interest.

At present, 12 sites are available for locators, and most property owners are willing to retrofit buildings to accommodate investors’ needs.

The Business Processing Association of the Philippines earlier said the country must develop three-quarters of talent living outside the National Capital Region. The BPO sector, IT and engineering sectors can grow by as much as 40% annually through 2010 if this talent is tapped, the group said.

Davao’s BPO work force is estimated to be twice that of Cebu, seven times that of Clark, Pampanga, and six times that of Baguio, according to a study by research firm XMG, Inc.

ICT Davao plans to prepare for the influx of investors by improving the city’s labor pool. The group is hosting a business process outsourcing job fair on Saturday and Sunday.

Meanwhile, recruitment of qualified agents for contact centers and medical transcription work has remained a major problem in Davao City notwithstanding training provided by the government.

Lizabel G. Holganza, president of the Transcription Alliance of Davao, Inc., said her school had signed a deal with a Cebu City-based company for 200 workers until November.

"The company has already offered signing bonuses to qualified recruits. But I worry that I cannot fill the slots," she said in an interview.

Cyber City Teleservices Phils., Inc., a call center company based here, is also experiencing the same problem. The company is recruiting talent in nearby provinces three months ahead because of the dearth of qualified applicants here.

Nanette O. del Monte, human resources head of Cyber City, noted that while it wanted to add 1,000 agents for its Davao operations, there are not too many qualified personnel.

The company had to cut its expansion to just 200 agents as a result. "To address the problem, we have to be proactive. So we decided to recruit outside the city and in other key areas of Mindanao. You can hardly find workers if you limit your recruitment to the city," Ms. del Monte said.

Ms. Holganza traced the problem to misplaced priorities on the part of trained workers. She said most workers who had been trained by the government were holders of degrees not related to the call center industry.

Some are nurses who are just waiting to be deployed abroad, many of them thinking that it would be better to work while waiting for deployment.

Ms. del Monte also admitted that a few of those who had applied with local call centers had been lured to work in Manila or Cebu where salaries are higher.

But they have failed to realize that the cost of living here is lower and the working environment is significantly better, she pointed out.

ICT Davao’s Mr. Barriga said problems confronting the industry would be discussed at the job fair over the weekend.

"We must address the gaps, especially now that the industry has considered Davao as among their top destinations," he said.

In a related development, a council for the ICT industry has been created in Cagayan, the Trade department said in a statement yesterday.

The Cagayan Development Foundation for Information Technology will bring together stakeholders from the academe, government agencies and nongovernment organizations to create a business environment in Cagayan conducive to ICT investors, it said. — Jessica Anne D. Hermosa and Carmelito Q. Francisco

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DTI positions Cagayan as Region 2 ICT hub

By Ma. Elisa P. Osorio
Friday, August 29, 2008 [ philstar.com ]

The Department of Trade and Industry (DTI) is positioning Cagayan as a progressive Information Communications Technology (ICT) hub with the creation of the provincial ICT council.

DTI, with the help of other agencies, formed the Cagayan Development Foundation for Information Technology (CADF-IT). The council is expecting to create a business environment that is conducive to the ICT industry.

The council will likewise prepare a highly qualified pool of talents through focused human intervention.

With the council in place, Cagayan is expected to be a progressive ICT destination in the country.

The council is comprised of industry players from the academe, non-government organizations and relevant national government agencies.

Meanwhile, the DTI through its Certified Establishment or CE Program will give due recognition to businesses who aspire for excellence by encouraging adherence to fair trade laws.

Trade Secretary Peter B. Favila emphasized that the CE program is anchored on DTI’s commitment to protect the consuming public from unscrupulous businessmen and trade malpractices.

“DTI regularly monitors compliance of industries to Fair Trade Laws (FTLs) and other related policies, including the Consumer Act, Price Act, Price Tag Law and Standards Law. Through this initiative, we assure the public that there are establishments that are consumer-friendly. On the other hand, the CE seal, shows businesses that indeed their efforts are recognized,” Favila explained.

Business establishments in the provinces of Tarlac, Bataan, Pampanga, Nueva Ecija, Bulacan, Zambales and Aurora in Region 3 recorded the most number of DTI certified stores nationwide.

For consumers, the CE seals will enable them to identify stores that offer quality goods at reasonable prices and provide efficient service to help them make wise buying choices and get value for their money.

The DTI-CE program was launched in 2006 and is open to all retail establishments, supermarkets, department stores, appliance centers, hardware stores, specialty stores and LPG dealers, and DTI-accredited service and repair shops.

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Baguio bingoteng ditched

By Artemio Dumlao
Friday, August 29, 2008 [ philstar.com ]

BAGUIO CITY – Majority of the board of directors of the Association of Barangay Chairmen running the bingoteng here is withdrawing their support to this controversial “game of chance,” perhaps their best gift   yet to Baguio City celebrating its 99th year on Monday.

Eight of the 11 members of the ABC are dumping the maligned bingo-socials being operated here that is akin to jueteng, finally realizing that it is hounded by legal and moral issues.

ABC vice president Eva Marie Fianza, Happy Homes barangay chairman said they had realized that the operation of bingoteng which they actively supported for months is not going towards the direction of helping the barangays.

At least 58 of the 128 barangays in the city had endorsed bingoteng’s operation, dreaming of barangay projects that the city    cannot fund.

Operating for four months now however, barangay chairmen said they have yet to see tangible projects.

Fianza who earlier “fought” bingoteng critics as she invoked financial autonomy of barangays to raise funds for village projects   admitted that bingoteng “is not for the betterment of barangays.”

Despite being branded as gamblers and immoral people with reservations at first, we gave the proponents a chance to try it, but Fianza claimed, “it has not prospered.” Perhaps, she added, “we have different forms of sourcing for funds for barangays.”

Aside from it, Fianza said, bingoteng under the ABC’s name had cast doubt on the integrity of the ABC Board. Instead of good, it has    created more harm on the barangays, she added.

The female barangay chief also lamented the operation of the bingoteng, earlier supported by some 60 barangay chiefs, had many inconsistencies including transparency of the funds and who is really behind it. “All the while, akala namin barangay leaders, pero may iba na nasa likod.”

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Infrastructure spending increased

Vol. XXII, No. 24 [ BusinessWorld Online ]
Thursday, August 28, 2008 | MANILA, PHILIPPINES
BY MARIA ELOISA I. CALDERON, Senior Reporter

STATE spending for infrastructure next year, as a percentage of economic output, remains below the 4%-5% benchmark believed needed to sustain growth, but economic managers of the Arroyo administration said this should not be a major problem.

Government spending on infrastructure remains below both
the regional average and prescriptions
for sustained growth. — Norman P. Aquino

Under the proposed P1.415-trillion budget submitted to Congress yesterday, the government plans to raise its infrastructure outlay by 20.67% to P147.47 billion next year, or P25.25 billion more than this year’s allocated P122.214 billion.

At P147.47 billion, however, public investment for infrastructure continues to lag behind a regional average of about 4% at 1.7% of the expected gross domestic product (GDP) for 2009.

This year, infrastructure spending accounts for 1.58% of GDP, which is projected to grow within a revised 5.5%-6.4% range.

Public sector infrastructure budgets, as against GDP, have been on a downtrend at least since 2000, documents from the House of Representatives’ Congressional Planning and Budget Department (CPBD) showed. Since the start of this decade, allocation for the sector in relation to GDP reached a peak of 3.54% in 2000 and had been below 2% since 2005, according to CPBD.

But Former Socioeconomic Planning Secretary Cielito F. Habito, current director of the Ateneno de Manila Center for Economic and Research Development, said in an interview yesterday that there could be an spike in this ratio as the 2010 elections approach, since "that’s been the pattern" in past election years like 2004 and 2007.

The World Bank has prescribed an infrastructure spending-to-GDP ratio of at least 5% for economic growth to become sustainable and to attract more investments.

While the government still eyes raising this spending level to 5.2% of GDP by 2010 under a medium-term development plan, Budget Secretary Rolando G. Andaya, Jr. yesterday noted that prevailing economic conditions do not warrant boosting outlays at a rate that would align with global yardsticks.

"Up to now, we’ve been having implementation problems with the infrastructure sector. Growth on capital outlay between January to June is only 2% year-on-year," he said in an interview. "There’s no sense in putting all those funds, when they can’t be spent withinthe year."

Mr. Andaya blamed the slow spending in the first semester on a slump in public construction, whose growth according to National Statistical Coordination Board contracted 9.5% in the first quarter year-on-year. "We identified the problems that caused the delay and, basically, it’s brought about by the increase in the price of steelWe expect infrastructure to catch up for the remainder of the year," he said.

But Mr. Habito said the government will have a lot of catching up to do in terms of public investment if it wants to sustain a 7.2% growth posted last year.

"I don’t know if the government could catch up in the remainder of the year," Mr. Habito said. "We have to have a more sustained and deliberate infrastructure spending."

Of the P147.47-billion proposed infrastructure outlay for next year, the Department of Public Works and Highways takes up the largest chunk at P99.72 billion, with roads and bridges alone accounting for P83.8 billion.

The Department of Agriculture will receive P17.315 billion, mainly for its post-harvest facilities and farm-to-market roads. The government is allocating P14.85 to the Department of Transportation and Communications; P8.5 billion to Education; P3.36 billion to Agrarian Reform Fund; P1.5 billion to Health; P1.16 billion to the Autonomous Region in Muslim Mindanao; and P1 billion to local governments.

It has also alloted P631 million for the rehabilitation of the Pasig River, P226 million to the Metro Manila Development Authority and P175.9 million to the municipal development fund.

The proposed 2009 budget assumes a P40-billion budget deficit.

The government estimates that the budget, which raises allocation for spending on agriculture by 62% to P35.8 billion, will help the economy expand 6.1%-7.1% in 2009 from a 5.5%-6.4% estimated growth this year.

Education got the biggest allocation at about P168 billion, or about 8.5% of total spending. Defense gets P65.2 billion, or aout 4.6%. Social welfare will receive a 117% increase in funding for cash payments and subsidies to families most vulnerable to soaring commodity prices. Government workers will get a pay rise, with P20 billion set aside for them.

Cost of debt servicing will fall to 21.4% of the budget next year from 22% this year and 31.6% in 2005. — with Reuters

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