Transcript GDP (Q1 2012) - German Global Trade Forum Berlin

Strong Indicators of a Growing
Philippine Economy
Strongest performing stock market in Asia in 2011
Philippines = 4.07% YTD
10%
5%
0%
-5%
-10%
-15%
-20%
Philippines
-25%
Sep-11
Oct-11
Source: Presentation of Dr. Bernardo Villegas, Trade and Investments
Talks, BOI, February 2012
Nov-11
Indonesia
Dec-11
Stable and resilient economic growth
9.0
8.0
7.0
6.0
GDP (Q1 2012)
6.4%
GNP (Q1 2012)
5.8%
Headline inflation (May 2012)
2.9%
5.0
4.0
3.0
2.0
1.0
0.0
2000
2001
2002
2003
2004
2005
2006
GDP
2007
2008
2009
2010
2011
2012
GNP
Headline Inflation Rates in the Philippines, All Items
(2006 = 100)
Continuous inflow of OFW remittances
• 2011 OFW remittances crossed the US$20 Billion barrier with full year record
of US$20.1 Billion
• Jan-Feb 2012: US$3.1 Billion, 5.60% higher relative to last year’s US$3
Billion
• No expected decrease despite global slowdown due to geographically diversed
sources
Steady export growth despite global economic slowdown
Service Exports:
• 2011 Service Exports hit an all-time high of US$11 Billion
o Anchored on the BPO sector that directly employs 640,000 people
Merchandise Exports:
• 2010: 34% Merchandise exports growth at US$51.4 Billion
• 2011: Electronics exports decreased by 23.7%, but overall decrease was only 6.9% at
US$47.8 Billion
• Q1 2012: Electronics exports was at US$6.75 Billion, an increase of 5.55% from previous
year’s US$6.40 Billion
o Q1 2012 also saw the growth of other top earners:
o
o
o
o
woodcraft & furniture (31.18%, US$506M);
apparel & clothing accessories (1.08%, US$470M);
ignition wiring sets (9.51%, $324M);
metal components (12.02%, $232M);
 15.3% surge in Gross International Reserves to US$76.13 Billion by March 2012 (US$10.15
billion higher than March 2011)
Steady investment flows
22% Increase in BOI Investment Approvals in Y2011 (P369 Billion)
6
Robust domestic financial sector coupled with credit growth
• Outstanding loans of universal and commercial banks amounted to P2.79
Trillion by end of 2011, up by 19.3% from last year
• As of end February 2012, non-performing loans ratio of universal and
commercial banks improved to 2.34%, lower by 0.59 percentage points from
past year’s 2.93% ratio
Efficient revenue collection effort
• P197.8 Billion national government deficit in 2011 was 37.1% lower than
last year
• 2012 budget puts the government on track for a reduced deficit at 2.0% of GDP
by 2013
Improving global competitiveness rankings
Improvement in Rank
World Economic Forum
Global Competitiveness Index
(2010 – 2012)
+20
(from #85 to 75 in 2011
from #75 to 65 in 2012
out of 142 countries)
Fraser Institute
Economic Freedom (2012)
+16
(from #77 to 61, 141 countries)
World Bank (2010)
Government Effectiveness Indicator
+1
(from #51 to 52, 207 countries)
Transparency International (2011)
Corruption Perceptions Index
+5 (from #139 to 134, 178 countries)
9
Other Notable Information

Asia’s friendliest country

8th World’s friendliest country
~ HSBC World Explorer Survey 2011 ~
 12th largest population in the world


Set to become the world’s 16th largest economy, up 27 places
from today
One of the new emerging countries due to favorable
demographics and strong economic fundamentals
~ HSBC’s “The World in 2050” Report
The Philippine Advantage
Rich Talent Pool
Robust Infrastructure
Strategic Business Location
First-Class Lifestyle
Attractive Investment Incentives
Attractive Investment Incentives
INCENTIVE
Income Tax Holiday
(ITH)
ITH Bonus
BOI
(Executive Order No. 226, as
amended)
PEZA
(Republic Act No. 7916, as
amended)
4 – 6 years (max of 8 years)
3 years provided the firm meets certain conditions
Special Tax Rate of 5%
on Gross Income
Importation of Capital
Equipment, Spare Parts
and Supplies
Wharfage Dues and
Export Tax, Duty, Impost
and Fees
Simplication of Customs
Procedures
Employment of Foreign
Nationals
CDC / SBMA
(Republic Act No. 7227 – Bases
Conversion Devt Authority
 Exempted from all local and
national taxes - value-added
taxes, franchise taxes, excise and
ad valorem taxes)
Special Tax Rate of 5% on Gross Income
0% duty-free
Tax and Duty-Free
Exempted
None
Available
 Foreign nationals may be employed in supervisory, technical or advisory positions within 5 years
from a project’s registration, extendible for limited periods. The positions of president, general
manager, and treasurer or their equivalents, of foreign-owned registered firms may be retained by
foreign nationals for a longer period.
 All foreign employees may bring with them their spouses and unmarried children under 21 years
of age.
Investment Priorities Plan 2012
I. Preferred Activities
Regular List:
 Agriculture/ Agri-business and Fishery
 Creative Industries/Knowledge-Based
Services
 Shipbuilding
 Mass Housing
 Iron and Steel
 Energy
 Infrastructure
 Research and Development
 Green Projects
 Motor Vehicles
 Tourism
 Strategic Projects
 Hospital /Medical Services
 Disaster Prevention, Mitigation and Recovery
Projects
II. Export Activities
 Production and manufacture of export products
 Services exports
 Activities in support of exporters
III. Mandatory List
IV. ARMM List
Sectoral Opportunities
ENERGY - Gross Generation and Installed Capacity, 2011
(Per Type of Fuel/Energy Source)
Installed Capacity
Generation
68,279 GWh
Note:
•
Preliminary gross generation as of January 2012
•
Excluding off-grid generation
•
Installed capacity as of June 2011
16,233 MW
Total Required Additional Capacity
(2011-2030)
LUZON - 10,450 MW
VISAYAS - 2,200 MW
MINDANAO - 1,950 MW
Philippines: 14,400 MW
Source: DOE PDP 2011-2030
Renewable Energy - Capacity Installation Targets (and FIT)
Sector
Installed Capacity
(MW)
Total Required
Additional Capacity
(2011-2030)
Feed-In-Tariff
(EUR / KWH)
Geothermal
1,966.0
1,495.0
-
Hydro
3,400.0
5,394.1
0.1092
Biomass
39.0
276.7
0.1228
Wind
33.0
2,345.0
0.1580
Solar
1.0
284.0
0.1792
Ocean
0.0
70.5
-
TOTAL
5,438.0
9,865.3
Source: Department of Energy
Innate Advantage in Renewable Energy
one of the largest
producers (second to the
US) of geothermal energy
in the world
abundant water resources
that can be tapped for
power generation
the top wind power
producer in Southeast Asia
high amount of solar
radiation that can be
converted into useful
energy
a big ocean energy
resource due to the
country’s archipelagic
nature
abundant supply of
biomass
Government Support
RA 9513 Incentives – For RE Developers:
1. Income Tax Holiday (7 years)
2. Duty-free Importation of RE M/E & Materials
3. Special Realty Tax Rates on M/E
4. Net Operating Loss Carry-Over (NOLCO)
5. Corporate Tax Rate of 10% after the ITH
6. Accelerated Depreciation
7. Zero Percent Value – Added Tax Rate
8. Tax Exemption on Carbon Credits
9. Tax Credit on Domestic CE and Service
Agriculture/Agribusiness and Fishery
major producer of tropical
fruits such as banana,
pineapple and mango
world’s eight largest fish
producer
market leader in canned
pineapple and juice
market
leading producer and
exporter of seaweeds
Agriculture/Agribusiness
1st in global share of
coconut production
viable location for rubber
plantation & processing
Palm Oil (one of five
countries in Asia with
palm oil plantations)
abundant supply of
mango fruit seed (mango
seed oil - ingredients for
cosmetics)
Tourism
2010 visitor arrivals reach all time high at 3.52 M
Top 3 Markets
Korea
Jan-Apr 2011
growth rate: 13%
USA
Japan
Top 5 Destinations
CEBU
CAMSUR
BORACAY
DAVAO
CAGAYAN VALLEY
Areas for investments:
• Retirement villages
• Medical tourism
• Healthcare & wellness products & services
• Tourist accommodation facilities
Mining
• Located in the “Ring of Fire”
• 5th most mineralized country in the world




2nd in Gold
4th in Copper
5th in Nickel
6th in Chromite
• 9 million hectares of mineralized land
 Only 1.4% with mining permits so far
 2.2 million sq. km. offshore mineral
potential
• 7 billion tons of ore reserves
• Large pool of professional geologists and
mining engineers
• Presence of highly organized institutions
and professional organizations
Ideal Locations
Most prolific copper and gold producers are
found in the Baguio and Mankayan districts
•
The Surigao-Davao districts also contribute
much to Philippine gold production
•
Nickel major producers are in Palawan and
Surigao
•
Potential areas and deposits identified by
the Mines and Geosciences Bureau:
-
Zambales – Cr, Ni, Co, Pt, Cu, Au
Samar-Eastern Mindanao – Au, Cu, Fe, Cr, Ni,
Pt, Mn
Palawan – Cr, Ni, Co, Pt, Au
IT & BPO
Industry Snapshot
Contact Center
• Contact Centers in PH: 220+
• Revenues in 2011:US$7.4B
• Full time employees as of 2011: 416,000 • Revenue Growth Y-o-Y: 21%
Back-office and KPO: Best-kept secret
• No. of service providers: 100+
• Full time employees as of 2011: 128,650
• Revenue in 2011: US$2.05B
• Revenue growth Y-o-Y: 24%
Software Development
• No. of development companies: 135 (export only)
• Total professionals employed: 49,908
• Revenue in 2011: US$993M, 37% growth Y-o-Y
Animation & Game Development
• 20yr wealth of experience in the field of Animation
• Capabilities in 2D, 3D, Maya, 3DMax, Medical/Educ. Graphics & Animation
• Revenue in 2011: Animation at US$128M, Game Dev’t at US$8M
Engineering Design
• Over 75,000 licensed professionals • Revenue in 2011:US$172M
• 40,000 graduate of engineering courses annually (CAD-enabled)
Why the Philippines is a Top Offshore BPO Location
Scalable Educated
Talent Pool
Cost
Competiveness
Excellent
Infrastructure
•
•
•
•
3rd-largest English-speaking country, 12th most populous country
90+ million population, 39+ million work force
470,000+ college graduates per year; 93% literacy rate
Western-based legal and accounting curriculum and certification
• Labor costs for English-speaking professionals among lowest in the world
• All-in costs among lowest in the world
• Predictable and manageable inflation
•
•
•
•
Abundant low-cost & high quality real estate in several urban areas
Reliable, redundant, low-cost telco infrastructure
Reliable power and building 100-200% back-up as a standard
Available 24/7 low cost transportation
Government Support
& Public-Private
Partnership
• Government support in education, locator support (PEZA, ICTO)
• Income tax holiday (4-8 years), 5% tax on GI post holiday, VAT exemption
• Comprehensive BPAP Road Map 2016 to achieve 20% YOY growth
Proven Track Record
• No. 1 in Voice: customer care, tech, financial services, sales, collections
• Mature/growing industry-specific and cross-industry capability: IT, F&A,
HR, Health & Care BPO, Procurement, Banking, Utilities, Telco
• Primary English-based services plus other Asian and European languages
• Analytics & KPO capabilites
29
Electronics
• Driver for export growth
• Home to seven of the world’s top 30
chipmakers and three of the largest HDD
producers
• Supplies the world with 2.5 million HDDs
per month
• Accounts for 10% of the SMS world supply
Market Opportunities
• Integrated Industry-Government Strategy for
Market Growth
 Shift from its present electronics products
portfolio to Electronics Manufacturing
Services (EMS) and later to other segments
of the electronics value chain which offers
spillover/linkages opportunities
Investment promotion for Solar Power,
Aerospace, Automotive, Medical and Military
companies
• Supply Chain Development
Supplier Development/Matching (for robust
supplier base)
Infrastructure
• The country only spent less than 2% of GDP on
infrastructure in recent years; target 5% of GDP
• Building infrastructure consequently a
cornerstone of the Aquino administration
• Given the large financial requirements, the
government pushes PUBLIC PRIVATE
PARTNERSHIP
• Since 2011, 2 infrastructure projects bidded out
• 8 in the pipeline. More to follow
Infrastructure
• The PPP ‘product’ is still being perfected
• Projects are in transport (rail and road), power
(LNG, coal, natural gas and renewable energy),
airports, seaports, water...
• Our contact at the PPP Center:
Ferdinand D. Tolentino
Deputy Executive Director
[email protected] www.ppp.gov.ph