The Philippine Economy

[Mercato]

Gents,

I posted this in a regional forum but I think it is more apt here.

Believe it or not, I found this on front page of the Singapore Straits Times yesterday. I cannot access the link on their homepage coz it's for registered users only.

Real Estate in the Philippines Red Hot. This was the very title I saw, written by a Caucasian business corrsepondent for the Straits Times, so no bias whatsoever. And the article was very, very comprehensive and quite long to boot.

It is more interesting to note that papers here rarely print positive things about the Philippines so this is indeed a good sign.

[Sinjin P.]

^ Here it is:

Philippines' property sector is red-hot
By , 3 May 2007
Source: Straits Times

THE talk at a recent dinner party in Hong Kong hosted by one of Europe's largest banks for a group of wealthy clients was centred - surprisingly - on the Philippine property sector.

I can't remember the last time investors like this have waxed so lyrically about the Philippines,' said a banker, who asked not to be named. Booming demand for office space and condominiums has resulted because of a rise in outsourcing to the Philippines, as well as the purchasing power of the country's more affluent overseas workers.

The upsurge, say developers and market analysts, shows no signs of flagging. The sector's upbeat prospects are vividly reflected in the share prices of property companies, which have risen by an average of 17 per cent so far this year, nearly double the advance of the Philippine Stock Exchange's main index.

'The property market is now very much on the radar screen compared to four or five years ago, when nobody even considered this place,' said Mr Lindsay Orr, country head of real-estate services group Jones Lang LaSalle.

The expansion of foreign companies' 'offshoring' of business functions such as call centres and back-office work to the Philippines has been breathtaking, eclipsed only by India.


This has created huge demand for large office space in prime areas of Manila over the past years, which developers are scrambling to meet.
The chances of finding rentable floor area for a sizeable outsourcing centre in the business district of Makati are practically zero these days.

Call centres typically need at least 32,000 sq ft of space. New rents in Makati rose 15 to 20 per cent last year. 'They'll probably do the same in 2007,' said Mr Orr. In the district's top addresses, landlords are raising office rents by as much as 30 per cent for new tenants, with some hitting 1,000 pesos (S$ 32) per sq metre.

Thought that is far lower than in most Asian financial centres, it is sky-high by local standards, Still, despite a large pool of educated English speakers, rents and salaries here will need to stay competitive as other countries ramp up their outsourcing sectors. With no large office buildings opening in Makati this year, new operations are looking for space in other parts of the capital, especially nearby Fort Bonifacio, a former military camp, as well as cheaper regional centres.

The second city of Cebu is now fast establishing itself as an outsourcing centre, as are smaller cities like Iloilo and the pleasant university town of Dumaguete, all in the central Philippines. A decade ago, the Asian financial crisis put paid to the last major rally in the property market here.

But this time around, said the Philippine Central Bank's Governor Amando Tetangco, the market is being dri- ven by real demand: 'It's different from 1997, when the rise in property prices was due largely to speculators.'

When Net Group, a property developer focused on projects for outsourced operations, completed its 22-floor
Net Square
building in Fort Bonifacio last July, it reportedly signed up tenants for the entire leasable space of 194,000 sq ft six months before it was finished. Blue-chip developer Ayala Land has managed to pre-lease over half of its 506,000 sq ft complex in Makati before the ground was broken on the project. The US$ 64 million Dela Rosa E-Services Building is set to open in late 2008.

Going by current estimates, future demand for leasable space for outsourced operations as well as so-called build-to-suit deals for specific clients will be mighty. The Business Processing Association of the Philippines reckons that by the end of the decade, 950,000 people will be employed in outsourced operations, nearly a four-fold rise on the current level.

'We're getting around six to eight visits a week from mostly American companies sizing up whether to outsource to here or to India,' said association executive director Mitch Locsin. 'About half are choosing the Philippines.'

Based on the association's projections, analysts reckon that by 2010, an additional 26 million sq ft of office space will be needed. That represents roughly the entire office stock in Makati today. But only around three million sq ft is currently under construction across the Philippines. Even so, mega projects are coming off the drawing board.

Ayala Land wants to replicate India's campus-type IT developments in the Philippines, starting with a 37ha site in Manila's Quezon City. Early next year, it plans to break ground on a US$ 191 million technology park with shops and residences built around 10 office complexes. Mid-priced residential condominiums, with units typically costing S$ 80,000 to S$ 160,000, are the property market's other main driver.

The demand here is being spurred by Filipino professionals working overseas and, lately, enticingly low mortgage rates. Some eight million Filipinos - a tenth of the population - live and work overseas. Many are in low-paying jobs, but an increasingly large number are nurses, engineers and other professionals.

That trend is being closely watched by property developers. As long as the remittances of overseas workers keep growing, there should be no let-up in demand, said Mr Victor Asuncion, research director of property consultants CB Richard Ellis Philippines.

The Philippine Central Bank expects overseas workers to wire home a record US billion (S$ 22 billion) this year. A sizeable chunk of that is expected to be spent on real estate. Remittances are also keeping shop tills ringing at home, and that is driving the construction of new malls.

With an eye to buyers from overseas, developer Megaworld now has 40 sales offices in countries with sizeable Filipino diasporas. The company, which pioneered the mid-end condominium market in the 1990s, expects 40 per cent of sales for middle-income housing to soon come from overseas earners.

Its biggest project is a 9,000-unit, 20-tower complex called Manhattan Gardens, on a 5ha site in Quezon City. The first tower, set for completion in late 2011, has been 90 per cent pre-sold. The surge in demand from overseas workers is also partly demographic.

'Many professionals who went overseas in the 1970s and 1980s are retiring and buying pro- perty in the Philippines as second homes and investments,' said Ayala Land spokesman Paulo Campos. Filipinos are also taking advantage of local mortgage deals, which have never been better. Some banks are now offering 25-year mortgages at fixed annual rates of 11 per cent.

The boom is clearly reflected in the earnings and share prices of the country's five major developers: Ayala Land, Fil-Estate Land, Megaworld, Robinsons Land and the SM Group of tycoon Henry Sy.

Megaworld is pencilling in a 40 per cent increase in net profit this year after earning 2.04 billion pesos last year. Condominiums are the only property that foreigners may own in the Philippines, though ownership restrictions may be relaxed.

President Gloria Arroyo, her economic managers and many in the business community favour loosening a number of restrictions to attract more foreign investment.

[ramvingar]

Originally Posted by NOVO ECIJANO

Gov't confirms Texas Instruments to build $1-B plant in RP


The Philippine government confirmed on Thursday that U.S. semiconductor firm Texas Instruments Inc., the world's biggest maker of mobile phone chips, would build a $1-billion plant in the country.

Press Secretary Ignacio Bunye said the plant would be located at the Clark economic zone north of Manila.

It will be the U.S.-based firm's second production plant in the Philippines.

The sources said a formal announcement on the plant was likely to be made later on Thursday.

President Gloria Macapagal Arroyo has called a news conference at 10:30 am and will announce the deal.

The company currently has a 25-hectare complex in Baguio City in the northern Philippines, and has been scouting for a new site in either the Philippines or China. The investment is likely to be around $1 billion, government officials had said previously. - Reuters

Wooohooo!!!! Hip hip hurray for the Philippines!!!

[Sinjin P.]

SEMICONDUCTOR GIANT SKIPS CHINA TO SET UP 2ND FACILITY AT CLARK
RP bags $1-B TI business
By Mia M. Gonzalez and Max de Leon

Reporters

PRESIDENT Arroyo on Thursday announced what she called “one of the single biggest investments” in the country’s economic history, a $1-billion expansion project of US chip maker Texas Instruments at the Clark Freeport Zone. It was an investment hotly contested by Vietnam, China and Thailand.

In a press conference after meeting with TI executives led by Kevin Ritchie, senior vice president, the President said that TI’s eight-hectare assembly/test site in Clark Freeport would employ initially 3,000 people, later increasing to 10,000 at full production.

The new TI plant, to support the existing TI facility in Baguio, will be called Clark TI Special Ecozone, said Trade Secretary Peter Favila. The TI will also set up its own engineering school in the area to support its manpower needs.

“The competition for this investment was fierce among the different possible sites in Asia, all wanting Texas Instruments to put their $1 billion in their places. We are thankful that Texas Instruments finally chose the Philippines. We look at this event as a sure sign that the Philippines has found its niche as one of the best investment destinations in Asia,” she said.

Besides the 8-hectare Clark facility, the Clark Development Corp. is allotting 30 hectares more for the support industries and suppliers of TI—about 500 firms are expected to locate to the area along with it.

“Normally the trend is, wherever the TI is, the suppliers follow,” Favila told reporters.

He said TI informed him three major suppliers are now talking with them and are interested in locating also in Clark.

The facility will begin construction in July or August this year, and is expected to be operational by the second half of 2008 to handle assembly, test, bump and probe manufacturing processes.

The facility, which Ritchie hoped would be a “showpiece both for the Philippines and Texas Instruments long into the future,” is expected to be fully built and equipped over a 10-year period and will be TI’s biggest investment since 2001.

Ritchie said the Philippines was chosen over Thailand, Vietnam and China because of factors like labor quality, incentives and TI’s successful 28-year operations in Baguio City.

The final venue decision was a toss-up between the Philippines and China, but the balance tipped to the Philippines’ favor because of “the performance of our site in Baguio.”

Favila elaborated on this later: “They looked at the historical Baguio for the past 28 years. That was a major consideration and most important, was the loyalty of the workers for the past 28 years; they never encountered labor problems. That was the most important; they cannot afford any disruption. Even during the earthquake people continued to stay and work to ensure there is no disruption in production,” Favila said.

At the same time, Favila said TI noted the availability of manpower in Pampanga, and the kind of engineering graduates that the colleges and universities there produce.

Moreover, the National Power Corp. assured TI of guaranteed continuous provision, especially since the power grid there passes through its location.

The expansion project would not only pave the way for a speedier construction period for the facility, but would also allow TI to share resources and expertise between its sites in Baguio and Clark.

“The Baguio [facility] is one of the best sites we have in Texas Instruments. The quality of the people there, the quality of the operation gave us high confidence that we’ll be able to start up a new site. So it really comes down to the quality of the Baguio operation that brought us back to this expansion to the Clark Free Port Zone (CFZ),” he said.

Ritchie said TI exports from the Philippines in 2006 reached $3.5 billion, which would “significantly increase” once the Clark site is operational.

He said the TI site in the Baguio Export Processing Zone accounts for 35 percent to 40 percent of TI’s revenue, which was at $3.2 billion for the first quarter of the year.

TI’s production capacity is seen to double once the Clark site is operational, or from the 275 million units produced by the Baguio site per quarter to 550 million units per quarter.

The Clark site will produce digital signal processing (DSP) products and analog chips for export all around the world.

Trade Secretary Favila said that because of the TI expansion in Clark Free Port, the Clark Development Authority has reserved 30 hectares in the area for the possible location of TI suppliers.

To further promote Clark Fre Port as a favored investment site, the President signed Executive Order 619 on August 26 granting tax and duty incentives to “duly registered business enterprises that will operate in special economic zones to be created by proclamation inside the CFZ.”

[Sinjin P.]

TI's expansion project in CFZ: A sure sign RP found its niche as one of the best investment sites in Asia -- PGMA

President Gloria Macapagal-Arroyo hailed today the move of Texas Instruments Inc. (TI), the world leader in digital signal processing and analog technologies, in choosing the Philippines, specifically the Clark Freeport Zone, as the site of its $1-billion expansion project that would create some 3,000 new jobs for the Filipino people.

"We look at this event as a sure sign that the Philippines found its niche as one of the best investment destinations in Asia," the President said as she announced this morning what was touted as "one of the biggest single investments in our economic history."

The President said it was through "strong international alliances" that the Arroyo administration was able to "forge new partnerships that have led to billions (of pesos) in investments that have created millions of new jobs," of which "the latest big one" is TI’s CFZ expansion project.

"The petition for this investment was pierced among the different possible sites in Asia, all wanting Texas Instruments to put their $1 billion in their places," the President said as she thanked the company for finally choosing the Philippines.

The President also thanked the Filipino people "who make the Philippines an attractive place to invest in." She assured that TI has vowed to make Clark the "most environmentally efficient assembly site in the world."

TI’s Senior Vice President for Technologies and Manufacturing Group Kevin Ritchie said the Dallas-headquartered company initially considered Vietnam, China, Thailand and the Philippines as among the site of its next expansion project, and it was trimmed down to between China and the Philippines.

Richie said TI finally chose the Philippines because of its "Baguio experience" where the Filipino worker is "industrious, loyal, skilled and fluent in the English language."

TI has been operating in the Philippines--at the Baguio Export Processing Zone, where one of the company’s most sophisticated final assembly and test sites of semiconductors is located-- since 1979 or 28 years ago.

On the choice of CFZ for TI’s latest expansion project, Richie said, "We like Clark very much because of the quality of education and students (there) are the same as in Baguio."

TI’s expansion project, set to start in July this year, would cover some 80,000 square meters or eight hectares of the CFZ and would open up some 3,000 new jobs for the Filipinos in a span of five to 10 years.

Trade and Industry Secretary Peter Favila said the bulk of the $1-billion investment would be poured in during the initial phase.

The Clark assembly would double the capacity of Texas Instruments in the country.

Clark Development Corp. president Liberato Laus said TI’s move to locate at the CFZ would further boost the Freeport Zone as the economic haven for the Asia-Pacific region, what with the plan of TI’s 500 suppliers to also set up their operations in the area.

[venntro]

That is really a very big thing for the economy and sadly, the headlines on the broadsheet focused more on the wiretapping issue on Cory... geez!!! Our media should promote the country and should try concentrating on the positive economic signs since this story will benefit more Pinoys.

[amigo32]

Good news kasi hindi magandang headline sa dyaryo yun. Lalangawin pag yun ang front page. Dapat kasi nakakakilabot, nakakatakot, yung tipong may gyera, may namatay, may artistang nabuntis, may jowa yung senador.


Kainis di ba?

[bariQ]

OMG! i really REALLY SINCERELY HOPE that the politikos wont screw this up! its a turning point for our country! this is a make or break critical time for us to make it BIG!

[portludlow]

TI’s $1B in new infusions a ‘good sign’ — Amcham
http://www.tribune.net.ph/business/20070505bus2.html

05/05/2007

Foreign businesses in the country welcomed as a good sign a $1 billion investment by Texas Instruments (TI) adding it may signal a rebirth in the country’s benign manufacturing sector.

The US-chip maker on Thursday announced it will invest $1 billion expanding its local operations in what was described as “one of the single biggest investments” in the country’s economic history.

The plant, which will be located in the Clark Freeport Zone, will effectively double its operations in the country that began 28 years ago in the northern mountain city of Baguio.

TI will build a 77,000 square-meter (828,520-square-foot) assembly and test operations facility in a 32-hectare (79-acre) site at the former US Air Force Base.

Regarded as a world leader in digital signal processing and analog technologies, Texas Instruments is a Fortune 500 company with revenues that amounted to $14.3 billion last year.

“Its a good sign,” Robert Sears the executive director of the American Chamber of Commerce of the Philippines said.

“It will send a great message to foreign investors and particularly American investors that the Philippines can be considered for large scale investment.”

Michael Clancy, CEO of the Philippine Business Leaders Forum, said: “The move is positive for the Philippines and for the manufacturing sector which has been in the doldrums for years.”

The deal came just days after Mrs. Arroyo signed a new executive order granting major tax and economic concessions to promote the Clark Freeport Zone as an “economic haven in the Asia-Pacific region.”

Raffy Galvez, marketing manager for the Clark Development Corp., said one of the incentives is a flat tax of 5 percent on gross income earned as opposed to the normal tax rate of 32 percent.

He said companies will also be able to import capital equipment and raw materials duty free.

“Companies will also be exempted from paying property tax for the duration of their contract,” he said.

He would not comment specifically on the Texas Instruments deal but added that companies in the economic zone will also benefit from easy access to working visas for foreigners and a “one-stop” center for processing import, consignment and export permits.

One of the biggest complaints from foreign businessmen doing business in the Philippines was the time taken tied up with bureaucratic red tape.

A power plant will also be built for the facility’s exclusive use, though the main electrical grid will still be tapped.

“The Philippines can be productive and cost effective,” Clancy said.

“Incentives to attract foreign investment is not a problem and long overdue. You have to give something away to get the money coming in.”

“This will give a major boost to the economy especially to the semi-conductor industry,” Lawrence de Leon an analyst with Accord Capital Equities Inc.

“And there is a good chance that we will see a major spillover into the economy as a result.”

Although businessmen have complained about the country’s neglected infrastructure and obsession with politics, De Leon says the investment shows that Texas Instruments “is looking beyond the regular problems in the Philippines.”

“They believe that issues will be addressed. They’re looking at the long-term picture,” he said.

Last year the Philippines attracted $2.35 billion in foreign investment, much less than its Southeast Asian neighbors.

Even the Daily Tribune which is very critical on everything likes it too!!

[3cr]

$2B will be a truly big amount that will be infused not just in the Global City but the economy as a whole as well and looks like Shimao sincerely wants to invest that $2Billion in Fort Boni really bad which is why I hope they win the bid and finalize that deal soon.

Shimao reaffirms commitment to invest $2B at The Fort
Thursday, May 03 2007 @ 02:27 PM BST
http://biz.balita.ph/html/article.ph...70503142733461

A land developer in China, the Shimao Group, reaffirmed its commitment to invest US$ 2-billion in real estate developments in Bonifacio Global City, top officials of the Bases Conversion and Development Authority (BCDA) announced Thursday.

BCDA Chairman Aloysius Santos and president and CEO Narciso Abaya jointly issued the statement following a meeting with Shimao Chairman Hui Wing Mao in Hongkong.

Brushing aside reports that Shimao was eyeing Bohol or Samar as alternative investment sites, the BCDA executives said Hui “reiterated his serious and firm interest in investing US$ 2 billion in Global City.” The first property to be developed is a 7.4–hectare lot where high-end hotels, condominiums, offices and commercial complex will be built.

Abaya cited Shimao as a “world-class, fast paced developer” that could finish a 900 room twin-tower luxury hotel in 18 months, as what they did with the Hyatt Hotel at the Bund in Shanghai.

For his part, Santos pointed out that Shimao’s entry into the domestic setting would “set a new standard in real estate development in the Philippines.”

During their China visit, Santos and Abaya toured major real estate projects of Shimao in Shanghai, among them the 66-floor Le Royal Meridien Shanghai described as the “newest and tallest five-star hotel in the city; the Hyatt Hotel at The Bund which is set to open within 10 days; and the sprawling Le Meridien Resort Hotel in Shesan, Shanghai.

The BCDA officials, which also included BCDA Executive Vice President Isaac Puno III, likewise visited Shimao’s high-end residential projects in the center of Shanghai, notably The Lakeside, composed of a cluster of luxury residential condominiums, villas and apartments, and the Riviera Gardens.

The China visit was made upon invitation of Chairman Hui himself who came to Manila last month to sign a memorandum of understanding with the BCDA for a joint development of a sizable portion of land at the Global City.

“This is one of the biggest partnerships of government for property development in 2007,” Abaya said following the signing of the Memorandum of Understanding between the Shimao Group and BCDA in March.

“This will further boost the asset disposition program of BCDA, and enhance its revenue generating capability, translating to more funds for the AFP modernization program and other beneficiaries,” he added.

Santos said that Shimao’s investment proposal is a sign of foreign investors’ confidence in the favorable investment climate created by the Arroyo administration. (PNA)

[smokingunmanila]

Originally Posted by bariQ

OMG! i really REALLY SINCERELY HOPE that the politikos wont screw this up! its a turning point for our country! this is a make or break critical time for us to make it BIG!

Kung manalo opposition..tapos mag impeachment trial...mag pull out yang texas instrument for sure....

[waketrex]

Originally Posted by venntro

That is really a very big thing for the economy and sadly, the headlines on the broadsheet focused more on the wiretapping issue on Cory... geez!!! Our media should promote the country and should try concentrating on the positive economic signs since this story will benefit more Pinoys.

I saw this one too

In the face of the spate of stories that are unflattering or damaging to the administration, including the fact that neighboring countries are getting much bigger foreign investments, the fact that the Philippines is being left out by neighboring countries in cornering foreign investments, the decision of Texas Instruments to expand its investments in the Philippines, instead of moving to China, is indisputably a feat that deserves public acclaim.

But journalists who took the trouble to cover the President’s press con were unhappy. They were taken for a ride because they were expecting something else. Perhaps, something related to the May elections, a bombshell that would hit the opposition hard. Even the press photographers were snickering, with one of them commenting that perhaps the Palace and TI should have just issued a press and photo release.

But just as everybody was about to leave the Rizal Hall, the venue of the press con, Secretary Bunye told the mediamen that he was ready to answer their questions on the burning issues of the day. After newsmen ran out of questions, the press secretary came out with a surprise story. He read the press statement of First Gentleman Jose Miguel Arroyo on his decision to drop all 17 libel suits he had filed against 47 journalists. However, he entertained no question about the First Gentleman’s statement.

That was an earthshaking story. The newsmen’s mood turned from disappointment to excitement. In the end, they got more than what they expected.

http://www.manilastandardtoday.com/?...agay_may5_2007

[Sind24]

Originally Posted by amigo32

Good news kasi hindi magandang headline sa dyaryo yun. Lalangawin pag yun ang front page. Dapat kasi nakakakilabot, nakakatakot, yung tipong may gyera, may namatay, may artistang nabuntis, may jowa yung senador.


Kainis di ba?

[amigo32]

Originally Posted by portludlow

Even the Daily Tribune which is very critical on everything likes it too!!

Yeah, tribune never mentioned PGMA when it comes to good news.

[dattebayo]

if it wasn't for marcos and the asian financial crisis, siguro wer as weathy as singapore today or mas mayaman pa. haay.

[queetz@home]

Actually it wasn't the Asian crisis that killed us. We actually weathered it pretty well. It was the Erap crisis that killed our economy. Its sad that there are people who want to bring President Moron back....

[smokingunmanila]

Kaya nung hindi binuksan yung envelope...I really went to the street and started honking my horn "erap resign" .I knew I was in jeopardy because my business will be endangered with the unstability it will bring...but...I don't care ...as long as our country will be heading in the right direction...

i remember Cory saying " siguro naman hindi lasengga si Gloria "...well now...she's on the other camp...just because of the hello garci conversation? compared to a drunkered gambler and womanizer? I was disgusted by Cory on her choice of evil....

[amigo32]

meron yatang hidden agenda si Cory.

[bariQ]

Originally Posted by smokingunmanila

Kaya nung hindi binuksan yung envelope...I really went to the street and started honking my horn "erap resign" .I knew I was in jeopardy because my business will be endangered with the unstability it will bring...but...I don't care ...as long as our country will be heading in the right direction...

i remember Cory saying " siguro naman hindi lasengga si Gloria "...well now...she's on the other camp...just because of the hello garci conversation? compared to a drunkered gambler and womanizer? I was disgusted by Cory on her choice of evil....

thats because she wants to be a hero... and since the media puts a bad light on the admin, she chose to jump ship since erap seems to be more popular nowadays... talk about BALIMBING!

[metrosuburban]

well dont be surprised, she and erap share the same vices. Walang ginawa yan kundi mag mahjong sa loob ng kanyang hacienda sa Tarlac. ask her friends kung gusto mo pa..