Philippines at the start of investment boom -starts an investment cycle

STARTING THE CYCLE. A CLSA equity strategist says there is "anecdotal evidence" that the Philippines is about to start an investment cycle.

There is "anecdotal evidence" that the Philippines is about to enter an investment boom.

"From a simple macro standpoint, we don't have an evidence yet of an investment cycle in the Philippines like in Indonesia and Thailand. But all the anecdotal evidence, including the PPP projects, the economy... all indications are that we will commence an investment cycle in the Philippines," Christopher Wood, an equity strategist for Hong Kong brokerage and investment firm Credit Lyonnais Securities Asia (CLSA), said.

In a CLSA study he co-authored, Wood said that Philippines' gross domestic product (GDP) data from the 4th quarter of 2012 "showed growing evidence of an investment cycle."

"Thus, the Philippines 4Q12 (4th quarter of 2012) real GDP growth accelerated to an annualized 7.5% QoQ (quarter-on-quarter) resulting in real GDP growth of 6.6% YoY (year-on-year) in 2012. But, most importantly, investment grew by 8.7% in 2012 after recording only 0.2% growth in 2011. This provides further evidence that an investment cycle is underway," the paper read.

The CLSA study said that an investment cycle would give "a third investment leg to the Philippines domestic story" on top of remittances and the BPO industry.

PPP delays

"One aspect of this investment cycle should be more rapid implementation of President Benigno Aquino's public-private partnership (PPP) program," the paper read.

Wood said that while investors are disappointed with the delays in the PPP projects, he does not think that the whole exercise is a disaster.

"Everyone's concerned about the delays. But on the other hand, I think a lot of those delays have something to do with due process, making sure that it's done properly. Provided those PPP projects are initiated over the course of the presidential term, that's the key thing, right?" he said.

"If nothing's done by the end of the presidential term, obviously that's a major negative. But from what I'm hearing, a lot of these PPP projects are in qualification stage or bidding stage. It's not like nothing's happening."

Virtuous cycle

Wood said that the Philippines is in a virtuous cycle when it comes to increased foreign investor activity in the stock market.

"The more the market goes up, the greater the number of foreign investors who can buy it because of rising liquidity," the paper read.

Wood said that this was not the case as recently as six months ago. He said that the Philippines had long been dismissed as "uninvestable" because of illiquidity.

In the 1st quarter of 2013, the PSE had an average daily trading volume of $219 million. The figure is much higher than the average of $142 million in 2012.

Foreign net buying of Philippine stocks in the 1st quarter of 2013 stood at $1 billion. The figure is nearly half of the $2.5 billion foreigners spent on Philippine stocks in 2012. -

Rappler.com

Continue reading

Screening of bidders for ₱17.5-billion Cebu airport expansion set

proposed Mactan Cebu International Airport a ₱17.5-billion project Cebu airport expansion

Interested parties in the ₱17.5-billion contract that aims to renovate and expand the Mactan-Cebu International Airport are expected to submit their eligibility documents to the Department of Transportation and Communications (DOTC) on Monday, April 22.

"We made sure that this project will also be attractive to investors in order to foster competitive and open bidding," the DOTC said Thursday.

Based on requirements laid down by the department, Philippine companies will have to partner with established airport operators from other countries as the DOTC said this will give local players an opportunity to learn from the technology employed by more advanced aviation firms.

In turn, the DOTC assured the private sector that the joint DOTC-Mactan-Cebu International Airport Authority (MCIA) Prequalification, Bids, and Awards Committee (PBAC) will maintain a level playing field in the bid by upholding transparency and fairness, hallmarks of procurement reforms in the department.

Twelve companies bought bid documents for the project which include the consortium of Philippine Airlines and San Miguel Corp., Manuel Pangilinan's Metro Pacific Investments Corp. and Gokongwei's JG Summit Holdings Inc.; and the joint venture of Ayala Corp. and Aboitiz Equity Ventures Inc.

"We are optimistic that the MCIA Project will generate the same level of interest from major local and international companies as what we saw from the AFCS (Automatic Fare Collection System) Project.  We made sure that this project will also be attractive to investors in order to foster competitive and open bidding," said the DOTC.

The project's objective is to efficiently handle the increasing air traffic demand, ensure convenience of expected eight million passengers, and promote aircraft operational efficiency through the construction of new passenger terminal, installation of necessary equipment and renovation and expansion of the existing terminal including maintenance and management.

The 20-year concession contract is expected to be awarded by project leader DOTC before the end of the year. (Virgil Lopez/SDR/Sunnex)

Sunstar

Continue reading

₱30-Billion Project to address Mindanao blackouts - Pres. Noynoy Aquino

NASA Night Map 2013 shows Mindanao is even darker than North Korea.  Mindanao Power shortage has becoming more severe. The demand is higher while the supply is not enough for the entire rich island. Mindanao Island has been forgotten for decades. 

President Benigno S. Aquino III witnessed yesterday the contract signing of the ₱30-billion investment of Filinvest Development Corp. (FDC), Inc. to build power plants in Mindanao and provide 405 megawatts of coal power to the region's grid.

The contract was signed between Phividec Industrial Authority and FDC for the establishment of the 405 megawatt circulating fluidized bed (CFB) coal-fired thermal power plant in an 84-hectare land within Phividec Industrial Estate in Villanueva, Misamis Oriental.

With the project, President Aquino said Mindanao will soon become the "Land of Promise Fulfilled."

"These plants that Filinvest are committing to is a reaffirmation of this confidence. They are a significant part of the long-term solution. This signing gives us peace of mind that the permanent solutions are being put in place," Aquino said. "By 2016, these three plants, by themselves, will be providing 405 megawatts of coal power to the Mindanao grid."

"With the energy these plants will be producing by 2016, we expect production capacity to be almost 470 megawatts above peak demand," he added.

"We are not just increasing Mindanao's maximum capacity. Beyond that, we are reinforcing their entire energy supply with more reliable and stable sources. We are making their energy infrastructure much more competitive," Aquino said, noting that the establishment of the power plant in Mindanao is expected to generate 2,000 jobs.

President Aquino said the development comes at a critical time when the government is working on a peace agreement with the Moro Islamic Liberation Front (MILF), noting that with the spur of economic growth in Mindanao comes more lucrative centers in the area aside from Davao and Cagayan de Oro.

NEW POWER PLANT IN MINDANAO –President Benigno S. Aquino III witnesses the signing of a land lease agreement between Phividec Industrial Authority (PIA) and the FDC Misamis Power Corp. in Malacañang on April 17, 2013, for the lease of land for the construction of a coal-fired power plant that will generate on initial 270 megawatts of electric power, targeted to operate in 2016. Seated with the President are Defense Secretary Voltaire Gazmin and Enegry Secretary Carlos Jericho Petilla. The agreement was signed by PIA Administrator and Vice Chairman of the Board Leo Tereso Magno and FDC President and Managing Director Jesus Alcondo. Others in photo are: Filinvest Land Inc. (FLI) First Vice President and General Counsel Atty. Pablito Perez, FLI First Vice President Engr. Antonio Cenon, Filinvest Development Corporation (FDC) Chairman Jonathan Gotianun Villanueva, Misamis Oriental Mayor Juliette Uy, PIA Chairman of the Board B/Gen. Triunfo Agustin (Ret), PIA Corporate Secretary Atty. Raul Ragandang, and Poblacion Barangay Captain Leah Dagasuhan. (Richard Viñas)

President Aquino, meanwhile, said that while there is a current power crisis in Mindanao, power woes in the southern part of the country did not happen overnight as former local officials in the area relied solely on hydropower without ensuring the maintenance of hydropower plants. Illegal logging was also prevalent.

"So, when we stepped into office, we knew that we had to start working immediately. We began making the structural changes that encouraged the private sector to come in and put up power plants," Aquino said.

He said last year, Aboitiz began a project to build two coal-fired power plants in Davao, which will provide a total of 300 megawatts, which will be finished by late 2015.

"Businessmen normally would tend to be a conservative lot. But here, they are actually placing the other sources to a commitment not in terms of a demonstrated market that is already there but rather this is really a commitment of theirs to share in building a future, which is to invest when it is not exactly clear," Aquino said.

"Everything will materialize in the best light. So, it is a boat of confidence on their part, and this should be encouraged. And, we should help those who are actively helping to solve the problem instead of grandstanding," he said.

The Palace had earlier said that power woes in Mindanao will ease by 2015 as power plants takes three to four years to be established.

Manila Bulletin

Continue reading