Revival of broadband project pushed

The Department of Science and Technology (DOST) is calling for the revival of the National Broadband Network (NBN) project, sans the allegations of overpricing and corruption that accompanied the project in the previous administration. According to DOST Secretary Mario Montejo, the new NBN, now referred to as the Government Broadband Network (GBN), will cost the government only P1 billion, far below the P14-billion ($329-million) price of the NBN-ZTE project. The GBN is expected to improve the communications capabilities of the government. It will integrate and address the data processing, storage, computing and high-speed connectivity needs of government offices. The Wallace Business Forum agrees with President Aquino’s decision not to prioritize the project. The government should abolish its plan of running its own broadband network given the high capex cost required. Also, operation and maintenance of the system will need highly-skilled people the government can’t afford. The government can simply tap the services of telcos, which already have the resources for a broadband network.


Ruffy Biazon is new Customs commissioner

Former Muntinlupa representative Ruffy Biazon has been appointed as the new Bureau of Customs (BOC) Commissioner, replacing Angelito Alvarez who was reportedly forced to resign after the President was convinced he had failed to curb smuggling and meet the agency’s collection target. Mr. Alvarez came under fire following the disappearance of 1,910 container vans, which reportedly cost the government nearly P3 billion in potential revenues, yet it was Mr. Alvarez that discovered that the containers were missing. From January to August of this year, the agency collected P171.14 billion, P24.24 billion lower than its target for the period principally because of the strengthening peso and some reduction in tariff rates. During Mr. Alvarez’s term, the BOC filed more than 43 cases with claims amounting to P53 billion. However, the cases are moving slowly through the courts. Mr. Biazon holds a degree in medical technology. Immediately after college, he was appointed by then President Cory Aquino as Youth Representative in the Videogram Regulatory Board. He served as his father’s (former senator Rodolfo Biazon) chief of staff before becoming a congressman in 2001. It would seem that      Mr. Biazon has little expertise for the post, his appointment being more likely due to his friendship and support of the President. Commissioner Biazon’s biggest challenges are how to break the entrenched corruption systems in the BOC and overcome the power of top smugglers to block any clean-up. Also, full computerization of all systems remains incomplete, yet is indispensable in any anti-smuggling campaign.




Economic growth expectations lowered

The disappointing 4% growth in gross domestic product (GDP) in the 1st half of 2011 has lowered the economic growth expectations to slightly below the low end of the original forecast range of 5-6% for the whole of 2011.  It was clearly the failure of the government to pump-prime the economy, which could have easily offset the weakness in foreign trade due to the natural disaster in Japan and the debt problems in the U.S. and Euro area, leading to the much lower-than-predicted Philippine economic performance. Although the government promised to catch up on spending even as exports are anticipated to post some recovery in the 2nd half, it is now unlikely for GDP to grow beyond 5% this year.


No more foreign borrowings for the rest of 2011

The increased volatility of the international capital market as a result of S&P’s one-notch downgrade of the U.S. credit rating has forced Philippine finance officials to shelve its planned borrowings of up to $3 billion (of which $2.5 billion would have been used to retire debts of shorter maturities) for the rest of the year. This, however, isn’t expected to impact adversely on the present state of government finances as the budget deficit is running well below ceiling (P43.7 billion as of end-July, or just 15% of the whole year cap of P290 billion), and the government has already secured $2.75 billion in 1Q11 of its $3.25 billion foreign borrowing requirement based on a projected P290 billion deficit. Additional borrowings may no longer be necessary given that the year-end deficit would most probably turn out to be just slightly higher than P200 billion at worst.










GDP growth, %







CPI, av. %







91-day T-bill rate, av. %







X-rate to $1, an. av.




















PH to negotiate reopening of Pacific high-sea pockets




The Philippines will send a team to the 8th regular session of the Western and Central Pacific Fisheries Commission (WCPFC) in Palau in December to negotiate the reopening of the high sea pockets in the Pacific Ocean. Local tuna producers have been severely affected by the high-seas closure, which started in 2009 when the commission released an order for closure due to overfishing of various types of tuna. The renegotiation was prompted by the findings that some types of tuna are not experiencing overfishing.      The Socsksargen Federation of Fishing and Allied Industries Inc. seeks for the establishment of a Special Management Area in High Seas Pocket 1 where Filipino fresh and ice-chilled fishing vessels may be allowed.




Mining projects secured during PNOY’s state visit to China




In his 5-day state visit to China, President Aquino was accompanied by a delegation of businessmen including representatives from 15 mining companies. Among the participating mining firms were Philex Mining Corp., Tranzen Group Inc., Macro Asia Corp., Benguet Corp., Oriental Peninsula Resources Group Inc., and OceanaGold Corp.    Four mining projects estimated to have a total value of $1.4 billion were secured during the state visit. These projects are the agreements between the Jinchuan Group Limited of China, the Tranzen Group Inc., and Macro Asia Corp. for a nickel project; China Trend Investments Inc., and Vulcan Industrial and Mining Corporation for an exploration project; Yun Feng and Oriental Peninsula Resources Group Inc. for hydropower, coal, and nickel off-take projects; and a Chinese company and Eramen Minerals for a nickel off-take and processing project.




PSE listing rules for energy companies approved




The Securities and Exchange Commission (SEC) has approved the proposed supplemental listing and disclosure requirements of the Philippine Stock Exchange (PSE) for petroleum and renewable energy firms. The supplemental listing requirements aim to relax the      1-year operating history requirement under the Second Board Listing Rules of PSE, and eventually allow the listing of petroleum and renewable energy companies.              These supplemental requirements took effect last September 8. The listing of petroleum or a renewable energy company is more challenging in the Philippines than in Hong Kong, Singapore, Australia, and Canada. Under the new rules, petroleum and renewable energy companies that intend to list on the local bourse must comply with the general listing requirements in the Second Board Listing Rules together with the supplemental requirements.





Front-loading of projects expected to spur public construction in 2H2011




The Aquino administration has announced that it will front-load projects that are due for 2012 implementation in the second half of 2011 to give the various government agencies the momentum to implement the big-ticket infrastructure projects under the Public-Private Partnership (PPP). All line agencies are now preparing proposals to jumpstart certain programs that have economic multipliers including projects targeting poor localities as beneficiaries. The identified infrastructure projects to be undertaken include rural electrification projects, infrastructure for agrarian reform, aquaculture support,  on-site housing and resettlement, farm-to-market roads, and additional national road and bridges.




The water industry is set to undergo major reforms




The Metropolitan Waterworks and Sewerage System (MWSS) announced plans and programs for the second half of 2011 and 2012 aimed at ensuring adequate drinking water supply in Metro Manila by 2015. Among these plans is the rehabilitation of Angat Dam,  the first such program to be undertaken since the dam first started operations in 1968. The MWSS signed a memorandum of agreement for the start of the structural assessment within the year. Another program started is the watershed protection program,        which aims to rehabilitate the Umiray, Ipo, Angat, La Mesa and Marikina watersheds.   The MWSS, in collaboration with concessionaires Maynilad Water Services Inc. and Manila Water Co. Inc., is also preparing a roadmap that will identify alternative water sources and revisit standards. This water roadmap is expected to be completed before the end of 2011. For 2012, MWSS plans to review the rate-rebasing process in water pricing.




BSP issues guidelines for Agri-Agra law




The Bangko Sentral ng Pilipinas released a circular to support stricter implementation of the provisions of the Agri-Agra Reform Credit Act (Republic Act 10000), which applies to banks and intends to boost the agriculture sector. RA 10000 supersedes Presidential Decree 717. The new Agri-Agra Law retains the mandatory credit allocation in PD 717 requiring 25% of banks’ total loanable funds to be allotted for agriculture and fisheries sector. Paid subscriptions to shares of stocks in Quedan and Rural Credit Guarantee Corp., Philippine Crop Insurance Corp., and other government-accredited rural financial institutions will be considered for compliance to the Agri-Agra law. The other forms of compliance available to banks are wholesale lending, investments in bonds issued by state-owned institutions, and lending to National Food Authority. Banks can also comply through investments in special deposit accounts instruments. The law states that proceeds of the bonds and investments must be used to finance agricultural activities.




Pagcor Entertainment City guarantees world-class standards




The Philippine Amusement and Gaming Corporation (Pagcor) upgraded its standards for the developments inside the Pagcor Entertainment City. The 4 licensees are Travellers International (the developer of Resorts World Manila), SM Group, Bloomberry and Aruze. Pagcor will require the licensees to allot a total of 250,000 square meters to leisure place, and 7.5% of the floor area will be for gaming. Another key requirement is for each licensee to have at least 800 hotel rooms in operation prior to the opening of any casino. Pagcor intends to make the Entertainment City internationally competitive by offering a variety of resort amenities and attractions.




Call Center Association becoming more institutionalized




The Call Center Association of the Philippines (CCAP) is becoming more institutionalized – from being volunteer-run, it will soon have a full-time management team.                   The management team’s primary objective will be talent development and for this,     the Global Competitiveness Institute (GCI) and the Human Resource Council will be set up. GCI will formulate standardized intervention and skills programs (especially on English language training), which will be implemented in high schools and colleges. The Human Resource Council will conduct research and intervention on employee welfare to ensure that industry compensation and work conditions are competitive. These initiatives are aimed to improve the current industry hiring rate of 8% to at least 12%. Demand for talent in the Philippine call center industry, which beat India in terms of total revenues last year, has reached critical levels, so much so that some people are hired even without college degrees. Some call center firms reportedly require only a high school degree from their new hires in order to fill their manpower requirements.







production in 2010 up by a tenth

Philippine coconut production reached 3.03 million metric tons (MT) in 2010, up by almost a tenth from 2.76 million MT in 2009. Coconut production last year was the highest recorded for the 2000-2010 period. The past decade averaged 2.56 million MT per year, with an annual growth of 2.3%. The government hopes to increase production to 3.37 million MT by 2016.



According to the Philippine Coconut Authority (PCA), aggregate export of coconut products in 2010 amounted to $1.63 billion, 84% higher than the $884 million recorded the previous year. This marks the 5th time that the Philippines’ coconut exports reached the billion-dollar mark. The first time was in 1979 with $1.04 billion. By volume, coco exports grew by 54% to 2.33 million MT compared with 1.51 million MT in 2009.


Coconut oil among the Philippines’

top export products

Coconut oil remains as one of the Philippines’ top export products, accounting for 60% of the total coconut exports by volume and 80% by value. The coconut oil’s robust performance last year is attributed to higher prices in the global market.  Around 80% of the country’s coconut oil exports are shipped to the United States and Europe.


Growth in shipments

this year threatened by tight domestic supply

However, from January to August of 2011 coconut oil (CNO) exports dropped 43.6% to 561,725 metric tons. The United Coconut Association of the Philippines (UCAP) attributed the drop to tight supply of coconut in the domestic market (PCA expects production to hit only 2.57 million MT, down by 15% from 2010). According to UCAP, coconut supply was tight because trees were “stressed” after 3 years of successive good production. This prompted the industry group to lower its projected coco oil exports for this year to 900,000 MT, a decline of almost a third from last year’s   1.34 million MT.


Low productivity has been plaguing the coco sector for decades

The issue of low productivity has been plaguing the local coconut sector for decades, but not much effort has been made to reverse this. There has been no massive replanting and fertilization of coconut farmlands. It is estimated that around 14% of the country’s 320 million coconut trees or 44.8 million trees produce little or no yield while a study commissioned by the United States Agency for International Development (USAID) noted that around 90% of total land planted is planted to trees that bear fruits after 7 years, and yield only about half of the hybrid’s yield.


Low level of financial support from the gov’t hampers the industry’s growth

The coconut industry is among the dominant sectors in Philippine agriculture.    Sixty-eight of the 79 provinces are considered “coconut areas” and an estimated    25 million (more than a quarter of the total population) depend on planting and harvesting of coconut for their livelihood. Despite being a dominant sector,    coconut farmers get very little support from the government. The industry’s growth has been hampered by the low level of financial support, characterized by underfunded and short-lived programs, which hardly make a dent in coconut production.


Global demand for coir and coconut water booming

Aside from traditional export products like coconut oil, copra meal and desiccated coconut, there’s also a huge market for coir and coconut water, which the local coconut industry could tap. Coir is the fiber obtained from the coconut husk. It can be used to make rugs, ropes and fiberboards. Coco coir net is used for soil erosion control and is ideal for the rehabilitation of football fields, golf course greens, and riverbanks and slopes susceptible to soil erosion (During President Aquino’s SONA last July 25, he mentioned that coconut coir fibers have been used locally as a cost-effective way to strengthen our roads). Western Europe has an annual coir yarn and rope demand of 54,000 metric tons while Japanese, Korean and European car makers have an annual demand of 137,000 MT of rubberized molded coir. The Metal Industry Research and Development Center of the Science and Technology department has developed a twining machine to mechanize the production of coconut coir. But more financial support is needed to further improve the quality of our coir products. Marketing is also important if we want our coco coir to get noticed by large markets like the United States, Germany, Japan, and South Korea.


American beverage

 firms to source

coco water from PH

During President Aquino’s trip to the United States, beverage firms Pepsi, Vita Coco and Fiesta Coco Equity pledged to source their demand for coconut water from the Philippines. Officials of Vita and Fiesta announced their plan of investing $15 million over the next 4 years to harvest coconut water from the Philippines and plant more coconut trees in the country. Pepsi Co. didn’t disclose its planned investment but expressed firmness in expanding its coconut harvesting operations in the Philippines.


Sen. Edgardo Angara has filed SB 2051 that seeks to establish the PHILCIDA

To help revive the ailing industry, Senator Edgardo Angara filed Senate Bill 2051, which seeks to establish the Philippine Coconut Industry Development Authority (PHILCIDA). The corporate body will be tasked to maximize the earnings of small coconut farmers and their families through the implementation of new policies in processing and transportation, research and development, and marketing and promotion of the coconut products. If the bill is passed into law, the PHILCIDA will be given P1 billion as initial coconut development fund. SB 2051 does not specify if PHILCIDA will replace PCA. This proposal, though, could be taken up in future committee hearings.


No portion of the coco trust fund may be transferred to any fund of the gov’t

The proposed measure mandates that coconut farmers pay PHILCIDA Php0.12 for every kilogram of copra they sell to traders, exporters, millers, desiccators and other end-users of coconut products. That money will go into a trust fund that will pay for PHILCIDA’s administrative expenses. The bill specifies that no portion of the fund may be transferred to any special fund of the government. SB 2051 also bans the conversion of agri lands devoted to coconut into other uses. Conversion may only be allowed in cases where it is proven that majority of the coconut trees in the land have become economically unproductive, and upon approval of the Department of Agrarian Reform and PHILCIDA. SB 2051 is currently pending on 1st reading. It is unlikely to be approved this 2nd regular session.


Gov’t needs to develop a roadmap for the  sustainability of coconut production

For the pledges to eventuate and to attract more coconut investments in the future, the government needs to provide more financial support to improve coconut production and ensure the income of farmers (a coconut farmer reportedly earns a measly P30,000 a year or P2,500/month). A roadmap for the sustainability of domestic coconut production must also be developed.

















In Million MT (copra terms)












Source: UCAP









In US$ Bn