Philippine News – July 2018

newspaper

Hello everyone,

Here’s some select articles about Philippine Real Estate and our Economy from various newspaper correspondents that matters for your reference.  Take note that these articles when assessed actually guides us locally what direction the economy is going, what kind of issues our government is going through and generally, and how this affects our real estate market.  Both local and foreign news directly affects investors / businessmen on their assessment of what business decision to make, this could be from the stock market ( which is a good barometer ) to daily activities ( hiring of workers, construction supply chain, and other economic variables.

here’s an article from manilabulletin.com correspondents, Ellson Quismorio and Danny Estacio :

new installed ship to shore crane at manila international container port ..(photo by ali vicoy)

SEAPORTS IN SEASON

The Philippines is one ambitious project away from redefining its place and self-perception in the South China Sea — and it’s staring us right in the face.

That project is Mayor Erwin Caralian’s proposed a 300-hectare reclamation and development project with Mega Pacific Victory Development Corporation (MPVC) in the coastal town of Gumaca in Quezon.

Potentially, the most impactful part of this endeavor is the Quezon International Seaport, which is envisioned to occupy at least one-sixth of the area to be reclaimed.

“This one will be the launching pad of all future delivery, transfers, import, and export of both raw materials and finished products,” Mauro Centeno, Mega Pacific Victory president and CEO, said.

Centeno pictured the Philippines as the world’s “gateway to Asia in the South China Sea,” which is a radical mindset change from what others may have on the country’s “lowly” standing when compared to the economic giants in the region.

But one could say that the Quezon International Seaport’s establishment is simply taking advantage of the Philippines’ most immovable yet overlooked asset — its strategic location.

It’s been a missed opportunity so far. An estimated one-third of global shipping transits the South China Sea, and in 2016 it was estimated that $3.37 trillion in world trade passed through that portion of the Pacific. The Philippines, despite the gift of its location, is not even among the top 10 exporters in terms of product value.

These were China, $874 billion; South Korea, $249 B; Singapore, $214 B; Thailand, $170 B; Vietnam, $158 B; Japan, $141 B; Hong Kong, $140 B; Indonesia $121 B; Germany, $117 B; and Malaysia, $106 B.

Most modern PH port

Carrying a price tag of $300 million (roughly P15.9-billion), the Quezon International Seaport will “definitely be more modern than any port in existence in the country,” Centeno vowed.

Initial designs showed that the 50-hectare seaport will have seven hulking container van cranes, although more can be added as the investors see fit.

“We need a new and bigger port that could cater to the future needs of the Philippine economy. Since we’re positioning ourselves as the gateway, it (seaport) will be among the first to be finished,” the company president said.

“Wala pang ganito sa south (There’s nothing like this in the south),” underscored Centeno.

“My town is the financial and business district and also the cultural and heritage center in the Fourth District of Quezon,” Mayor Caralian noted with much pride as if his town of Gumaca had a birthright to host Asia’s port to the world.

As he spoke, the mayor held in his hand the blueprint for the project and said the Provincial Development Council approved a resolution endorsing it to the Philippine Reclamation Authority (PRA) and the Regional Development Council (RDC) in CALABARZON (Cavite, Laguna, Batangas, Rizal, and Quezon).

“We first thought of the project in 2011, pero ngayon lang umaayon yung sitwasyon (it is only now that the situation is favorable). It is also in line with federalism,” Centeno said, referring to one of the current administration’s top advocacies which is “Build, Build, Build.”

Why Gumaca? Why not

But why Gumaca, though? Aside from easy access to the Pacific Ocean, Centeno said the area is protected by an isthmus that serves as a natural breakwater or barrier against tsunamis.

The potential for development in Quezon, the seventh largest province in the Philippines, is also high. If pursued, the province’s export potential is raised along with that of the Bicol region’s as well as Mindanao’s.

“Our plan is also in line with the national government program of creating new economic centers in the province, aiming of decongesting Metro Manila,” said Mayor Caralian, adding that the provincial government is on board.

He said the project to expand the coastal road that will service the entire length of Quezon’s coast is even the idea of Quezon Governor David C. Suarez, who vowed support before the Provincial Development Council.

The mayor added that future reclamation is located strategically in the urban influence barangays of Rosario, Lagyo, Buensoceso, Penafrancia, San Diego, Poblacion, and Tabing Dagat and other portions of Lamon Bay Area.

Caralian told in the Manila Bulletin, that as early as now, many investors have sent their interest in the project, fueling his optimism of realizing it sooner than he had earlier thought.

Earlier this week, he confirmed that the Municipal Council has already passed a resolution reclaiming the first 20 hectares for the initial stage of the project.

here’s an article from asia.nikkei.com correspondent, Cliff Venson :

philippine-competition-commission_2018-03-21_01-45-30

Philippines Competition Watchdog takes on Duterte’s acquisitive Friend :

Businessman Dennis Uy’s growing empire faces challenge from Antitrust Regulator

MANILA — The Philippine Competition Commission has dealt a blow to another powerful businessman, and this time it’s President Rodrigo Duterte’s deal-making friend Dennis Uy.

The entrepreneur from Davao City, who is one of Duterte’s campaign financiers, is the latest tycoon to draw the attention of the antitrust authority, which previously scrutinized deals made by corporate bigwigs like SM Investments, Ayala Corp. and San Miguel.

Earlier, the commission voided Uy-led Chelsea Logistics Holdings’ acquisition of Trans-Asia Shipping Lines for not notifying the regulators about the December 2016 deal. The parties were also told to pay 22.8 million pesos ($427,500) in penalties, according to a June 28 decision that was disclosed only on July 3.

The Trans-Asia deal also prompted the commission to grant a “conditional clearance” on another acquisition by a company controlled by Uy. The deal involves the purchase by Chelsea of the parent company of 2GO Group, a major logistics and shipping company.

The commission said Chelsea’s control of both 2GO and Trans-Asia “would lead to a substantial lessening of competition” in certain shipping routes in central Philippines, an archipelago.

Chelsea, which called the decision “unfair” and the fines “unduly harsh” on July 3, said it was contemplating asking the commission to reconsider its decision or challenging it directly in appeals court. Uy’s group said the Trans-Asia deal falls under the 1 billion peso threshold to trigger a mandatory notification.

The commission’s decision is a blow to Uy, whose rise as one of the country’s most aggressive businessmen coincided with Duterte’s presidency. Apart from investing shipping companies, Uy has purchased a logistics hub, a liquefied petroleum gas company and a culinary school, as well as the local franchise of the Family Mart convenience store chain.

Uy told the Nikkei Asian Review last year that his investment decisions were emboldened by his confidence in the current political leadership.  Duterte was a long-time mayor of Davao, where many of Uy’s businesses flourished.

Meanwhile, the PCC has challenged deals made by powerful business groups ever since its establishment in 2016.

The commission’s bid to examine the joint acquisition by PLDT and Ayala-led Globe Telecom of San Miguel’s telecom assets resulted in a court battle. Earlier this year, SM Investments, the nation’s largest conglomerate by market capitalization, backed out of a deal to acquire a leading bakeshop chain after the commission imposed stringent post-merger conditions, including random inspections by the commission. The commission is also reviewing the merger of Grab and Uber’s Southeast Asian operations.

The commission, which was created as an independent body under the Philippine Competition Act passed in 2015, is an agency attached to office of President Duterte, who appointed Uy as his adviser for sports.

In an interview with Nikkei Asian Review last year, Uy said he does not use his ties with the president to gain favors. “I don’t lobby,” he said. “I just follow the rules.”

here’s an article from businessmirror.com.ph correspondent, Car Ordinario :

West-Philippine-Sea (3)

What Happens in the West Philippine Sea Concerns the World.  Here’s why.

It’s been two years since the Philippines received a favorable ruling from the Permanent Court of Arbitration ( PCA )  in The Hague, but there is rising criticism about the country’s seeming failure to leverage this when it comes to the issue on the West Philippine Sea ( WPS ).

At a forum marking the second anniversary of the ruling that many other nations disputing China’s nine-dash-line claims over the South China Sea have also hailed, a number of experts expressed dismay over the Duterte administration’s soft stance on the WPS.

One concern was that the Philippines’s failure to use the PCA ruling to enjoin China from further expanding in the West Philippine Sea—how Manila calls the area it claims in the vast South China Sea—could embolden Beijing to use aggression in pushing deeper and wider in other waters in Asia.

Another concern was that a tepid response to the ruling dampens efforts by concerned parties in pushing for a rules-based order in the region’s strategic waters.

Rules-based order

Brahma Chellaney of the Center for Policy Research in New Delhi said the PCA ruling that favored the Philippines is helping create a rules-based order in the Indo-Pacific region.

He said that prior to the ruling, China was “emboldened” not only to build on the WPS, but also to explore possibilities in the Western Pacific and Indian Ocean region “as if to underscore [that] nothing succeeds like aggression.”

“Make no mistake. What has happened in the South China Sea carries far greater long-term implications for the world, not just for this region, but for the world,” Chellaney said.

However, Chellaney said the Philippines’s current strategy in the WPS is “counterproductive” in that it cannot prevent China from expanding in the region, and undermines the country’s long-term strategic interests.

Makoto Seta, associate professor at Yokohama City University, agreed and said the current stance of the Duterte administration is “inconsistent” with the ruling.

Seta encouraged the Philippine government to push for the rule of law when it comes to the WPS. “I expect the Philippine government to emphasize the [importance of the] rule of law.”

Chellaney added that this means China should also receive sanctions for its aggression in the WPS.

He said, however, China was not meted out sanctions, contrary to when Russia annexed Crimea. Chellaney said Russia was made to pay a “heavy price” in the form of Western sanctions.

Reports said the United States and European Union imposed economic sanctions on Russian companies and individuals to act as deterrent to any similar move.

“China has paid no international price for its aggression in the South China Sea. And it sends a very wrong message to the world,” Chellaney said.

Benefits from ruling

Meanwhile, members of the Asia-Pacific Economic Cooperation (Apec) such as the United States, India, Australia, Japan and South Korea have already started to benefit because of the freedom of navigation that is included in the PCA ruling.

In fact, economist Bienvenido Oplas Jr. told the BusinessMirror, these are the same countries now benefitting from the ruling. The freedom of navigation allows their navy fleets to ply through the WPS without being barred from entry.

Oplas said the US, Australia and even the United Kingdom have invoked the freedom of navigation ruling granted to the Philippines even if the country itself seems reluctant to use it for its own ends, at least with regard to preserving its natural resources and protecting the livelihood of its fishermen.

“The ones who actually implement the PCA ruling are the developed countries. All the Philippine government needs to do is say yes, we still invoke it,” Oplas said.

Oplas said invoking the ruling means investing in drones and strong jet fighters, among others. These will allow the government to monitor and defend the Philippines’s coastlines.

As one of the countries in the world with the longest coastline, the burden falls on the Philippine Navy and Air Force.

He thinks some of the funds should be transferred to the Philippine National Police (PNP). Oplas said the Army is now performing functions that could be done by the PNP, such as dealing with internal organized groups such as the New People’s Army (NPA) and the Abu Sayyaf.

“The entire AFP [Armed Forces of the Philippines] is for external defense. So the likes of the Abu Sayyaf, these are internal factors, NPA is actually [an] internal factor. This is the reason why the PNP is becoming corrupt because they do not fight true criminals. What they do is go after people riding motorcycles without helmets, pedestrian [issues], enforce anti-tambay. These are very mundane tasks,” Oplas explained.

To generate more public funds, Oplas recommended that the budget for the Philippine Army be reduced and transferred to the Navy and Air Force. He also recommended the abolition of the Philippine Military Academy (PMA).

Oplas estimated that the state forks out around P50 million to P75 million for each PMA student—an unnecessary expense, in his view, given that there are many countries who are not military lightweights but have no military academies. These countries, however, rely on mandatory military drafting.

“The most battle-tested army in the whole world is Israel [and] they don’t have a military academy,” Oplas said. “Even Germany does not have a military academy; even Japan doesn’t have a military academy.”

Oplas suggested that the government sell its military assets, particularly Camp Aguinaldo in Quezon City. He said a modest headquarters will do for the military in Metro Manila.

He said this can be turned into a Bonifacio Global City (BGC)-like development which is first class and open to the public. Prior to its development, Oplas said Fort Bonifacio was ugly and closed to the public.

However, any development of Camp Aguinaldo, Oplan said, should be done carefully so as to avoid the ills of the development of BGC. Oplas said the privatization benefits of BGC were limited because of subsidies.

“The problem was they butchered the resource. By the time it was privatized, they created housing for the poor, [subsidized] education, so the total revenue from the Fort Bonifacio privatization became smaller,” he said.

Filipino Poor deserve Justice

Meanwhile, in the same forum organized by Stratbase ADR Institute, Vice President Maria Leonor G. Robredo said the fishing grounds that could provide decent livelihood to small fishermen are being taken away by China either through brute force or unfair trade.

She told of the story of Renato Etac, a 40-year-old Filipino fisherman, who singlehandedly stared down Chinese Coast Guard rifles in Panatag Shoal in 2016, and of a fisherman named Danilo, who was left helpless as Chinese fishermen boarded his boat to get his best catch of the day.

“Former Philippine President Ramon Magsaysay once said, ‘That he who has less in life should have more in law.’ Such is true among individuals who are marginalized and disenfranchised. Asserting what is lawfully and rightfully ours for people like Renato and Delfin,” Robredo said.

“Rule of law ensures that even on the global stage, there is equality and inclusivity, so that every member of the human family has a voice,” she added.

The effort to uphold the ruling at the PCA is of utmost importance because fishermen, particularly those affected by the conflict in Panatag Shoal, cannot afford to wait.

Robredo said these fishermen are in dire need of livelihood assistance, especially because their traditional fishing grounds are no longer safe. This plea, she said, has grown louder especially amid the rising cost of living.

Data from the Philippine Statistics Authority (PSA) showed the inflation experienced by the bottom 30 percent of the population increased to 5.3 percent in the first quarter of the year, the highest recorded in four years for the poorest Filipinos. In Metro Manila, inflation reached 5.9 percent and in areas outside NCR, 5.3 percent.

“We also want the Filipino people to know that this is not an entirely hopeless situation, because there are remedies that will not require that we go to war,” Robredo said.

Apart from the fishermen, Robredo said the entire Association of Southeast Asian Nations (Asean) would benefit from the leadership of the Philippines in the WPS.

Indeed, the road to attaining peace and justice in the WPS may be long and difficult. But experts agree that the Philippines must endure and fight for its rights.

It’s been two years since the PCA ruled in favor of the Philippines. Despite a soft stance adopted by the Duterte administration, the ruling stays and it will remain a victory not only for the country but for many other countries benefitting from the bounty of the West Philippine Sea.

here’s an article from manilastandard.com correspondent, Julito G. Rada

world bank

World Bank keeps Growth Target

The World Bank on Friday said it kept its 6.7-percent growth forecast for the Philippines this year and in 2019, as sustained private consumption and higher government spending are seen to offset the

uncertainties coming from the external front.“Considering recent economic data, the composition of expected growth was revised as compared to the April edition of the World Bank Philippines Economic

Update,” the multilateral lender said in a statement.“Given recent fiscal trends, government consumption growth was revised upwards, while private consumption growth is expected to expand at 5.9 percent in

2018 and 6.2 percent in 2019,” it said.It said investment growth was slightly upgraded due to higher public capital outlays, including increased infrastructure spending.“Overall, it is anticipated that real GDP

growth will increase towards the end of 2018 and into the first half of 2019 with higher election-related public spending,” the bank said.Birgit Hansl, World Bank lead economist for the Philippines, said the

government’s ability to carry out its investment spending agenda would determine if the Philippines could achieve its growth target of 6.5 percent to 7.5 percent over the medium term.“In addition, higher private

investment levels will be critical to sustain the economy’s growth momentum as capacity constraints become more binding,” Hansl said.Exports, a key driver of growth for the Philippines economy, are projected

to moderate in the coming years as global growth is expected to decelerate.

The World Bank’s June 2018 Global Economic Prospects projected a gradual global slowdown over the next two years, predicated on moderately higher commodity prices, strong but gradually moderating global

demand, and incremental tightening of global financing conditions.It said uncertainty around global growth conditions had risen, with the possibility of trade and other policy shocks emerging from major

economies. The Philippine economy grew by a higher-than-expected 6.8 percent in the first quarter this year, driven mainly by the government’s higher fiscal spending and robust private consumption. The first-

quarter GDP was higher than 6.5 percent a year ago and 6.6 percent a quarter ago.The government expects the economy to grow between 7 percent and 8 percent this year, on the back of higher fiscal spending,

robust domestic demand and investments.The inflation rate, however, has accelerated, climbing to a five-year high of 5.2 percent in June from 4.6 percent in May, prompting the Bangko Sentral ng Pilipinas to

review its monetary policy.The June figure was the highest inflation rate in more than five years since the Philippine Statistics Authority used the 2012 consumer price index. It was also faster than 2.5 percent

registered in the same month last year.

here’s an article from http://cebudailynews.inquirer.net correpondent, Jose Santino S. Bunachita :

Tourists-Spots-in-the-Philippines-Featured-Image

Developers Urged: Ride T2 Wave; Invest in Leisure Facilities

On July 1, 2018,  Cebu will open the world’s first resort airport.

Terminal 2 of Mactan Cebu International Airport (MCIA) will start commercial operations tomorrow with check-in procedures starting as early 1 a.m.

The P17.5 billion facility, which was constructed by the GMR-Megawide Cebu Airport Corporation (GMCAC), is expected to increase the airport’s capacity to up to 12.5 million passengers a year.

With this expected influx of tourists coming into Cebu and the rest of the Visayas, developers, both homegrown and national players, were urged to invest more in leisure facilities such as hotels to be able to get a share of this coming market.

Property management and research firm Colliers International Philippines sees sustained hotel occupancy in Cebu in the next one to three years.

“Colliers believes that aside from the influx of local and foreign tourists, the demand for more leisure investments such as hotels and serviced residences should be fueled by Cebu’s thriving outsourcing and industrial sectors,” the firm said in their latest report.

They also see tourism becoming a major plank of Metro Cebu’s economy, and that it would spill over to other sectors like retail.

Things are expected to be more hectic at the airport operations control center when the new Terminal 2 opens on July 1

Data from Colliers show that in 2017, Cebu attracted 4.9 million foreign and domestic tourists which sustained hotel occupancy of 78 percent. This is higher than the 70 percent recorded in 2016.

Aside from developing leisure estates, Colliers also recommends for developers to bring in more foreign brands; build more hotels along new road infrastructure; improve loyalty programs; expand facilities for meetings, incentives, conferences, and exhibitions (MICE); and integrate health and retirement facilities.

Some local developers like Cebu Landmasters, Grand Land, Tanchan Corporate Group, and AppleOne Properties have already teamed up with international brands for upcoming properties in Cebu.

Colliers sees these projects to be able to compete with foreign-branded hotels and serviced residences over the next 12 to 48 months.

GMCAC will be holding a pre-opening celebration today (Saturday) at the Terminal 2 where a thanksgiving mass and blessing of the facility will be done.

Tomorrow, July 1, check-in procedure at the new terminal will start as early as 1 a.m.

The first arriving flight in the new terminal is China Eastern Airlines’ MU5023 which will arrive in Cebu from Shanghai, China at 3:40 a.m.

The same airline will be the first to also depart from the new terminal for its 4:40 a.m. Cebu to Shanghai flight MU5024.

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robert
Robert G. Sarmiento Properties
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