PINAI to invest US$85 million for wind farm project in Luzon island

The Philippine Investment Alliance for Infrastructure (PINAI), a fund partly financed by the Asian Development Bank (ADB), is investing up to $85 million for a wind farm project in Luzon.
 
The 81-megawatt project – PINAI’s first investment ever – is a joint venture with AC Energy Holdings Inc., a wholly-owned subsidiary of Ayala Corporation, and UPC Renewables Partners (UPC) through UPC Philippines Wind Holdco BV.
 
“We are delighted that PINAI has selected a green power project as its first investment. It is aligned with our objective of making the country’s growth more inclusive and sustainable,” said Janette Hall, Senior Investment Specialist at ADB’s Private Sector Operations Department.
 
PINAI tales 32% of the project, while AC Energy and UPC will own 64% and 4% respectively. The first phase of the project will generate at least 54 megawatts, to be connected to the grid by June 2014.
 
PINAI is a $625 million private equity fund focused exclusively on Philippine infrastructure projects. It was launched in July 2012 to capitalize on the various public-private partnership opportunities in the Philippines.
 
The fund is expected to spur more private equity funds that will catalyze additional long-term capital into the country, and further development of domestic capital markets.
 
According to the Philippine Development Plan, around 12% of the country’s $120 billion investment requirements need to come from the private sector.
 
PINAI is managed by Macquarie Infrastructure and Real Assets. It is jointly financed by ADB, Philippines’ state-owned pension fund Government Service Insurance System, Dutch pension fund asset manager APG, and the Macquarie Group.

Transforming consumption-driven to investment-led economy

 
The Philippine National Economic and Development Authority has underscored the need to transform the structure of the domestic economy from consumption-driven to investment-led and employment-oriented in order sustain rapid growth.
 
Socio-economic Planning Sec. Arsenio Balisacan said that given the favorable macroeconomic fundamentals especially the fiscal sector and high business confidence, the government can accelerate the implementation of development programs that will shift the economy to a higher growth trajectory.
 
He noted that the industry sector has great potential to boost inclusive growth. For instance, the results of the April 2013 Labor Force Survey showed that while employment in agriculture fell by about 624,000 workers, employment in the industry sector grew by 3.8 percent or 224,000 workers from April 2012 to April 2013.
 
The quality of employment in the industry sector also improved, with the number of persons working 40 hours and over per week increasing to about 79 percent in April 2013, from 64 percent in April 2012, said Balisacan.

“This trend is also reflected in the increasing percentage of wage and salary workers, which rose to about 58 percent in April 2013 from 56 percent in April 2012.”

“The wage and salary worker category is often seen as an indicator of the quality of employment. So when that category is rising in relative terms, it suggests that the quality of employment in the country is also improving,” he said.

Balisacan stressed that NEDA’s drive to revitalize the domestic particularly manufacturing is closely related to its strategy to massively generate quality employment especially for low-skilled workers.

He cited the recommendations of the manufacturing industry roadmap compiled by the Philippine Institute of Development Studies (PIDS).

One of the recommendations is for the government over the next four years to focus on strengthening and rebuilding existing capacity of industries especially those with strong potentials to generate employment; addressing missing gaps and creating linkages and spill-over effects in sectors such as automotive, electronics, food, garments, motorcycle, shipbuilding, chemicals, and allied or support industries.

In the medium medim term from 2018-2021 as domestic capacities are utilized, efforts in the initial stage should lead to expansion and new investments especially in the upstream, immediate or core sectors such as parts and components industries. 

“By linking manufacturing with agriculture, construction, and services, supply chain gaps will be addressed and forward and backward linkages will be strengthened.  As these efforts continue, the objective of having a globally competitive manufacturing sector will be achieved,” said Balisacan.

“The measures and strategies that are needed to promote inclusion are also the ones needed to increase the country’s long-term competitiveness. For example, investing in human capital development, especially in health and education, will also enable us to develop a larger pool of potential S&T and R&D talents.”

“Improving access to transportation, energy, communications, and financing will enable closer interconnections between companies, suppliers, and industry sectors, thus increasing efficiency, reducing barriers to entry, and creating greater opportunities for innovation in products and processes.”

Balisacan said maintaining macroeconomic stability and a good business environment will help attract investments, thus creating employment opportunities and enabling more Filipinos to contribute to growth.

He also pointed out that inclusive growth requires deliberate policies that expand opportunities for remunerative employment and human development.

“It also demands development in the periphery through integration of the lagging areas or regions of the country with the fast-growing, leading areas or regions. Large-scale targeted programs also need to be in place to directly assist those who are unable to participate in the growth process.”

“Scientific and technological innovations can also promote inclusiveness, not only by promoting rapid growth, but through its direct benefits in improving quality of life, food security, and environmental protection,” Balisacan added

Income inequality weakens economic growth

 
Inequality in incomes and opportunities can weaken the power of economic growth as a key strategic vehicle for eliminating poverty in the country.
 
This was stressed by Socio-economic Planning Sec. Arsenio Balisacan saying that rising inequality can also undermine political and social stability, which is a necessary condition for sustainable development and prosperity.
 
Balisacan told members of the National Academy of Science and Technology (NAST) that poverty in the country remains high and has not changed much in recent years.
 
Based on the official poverty lines, the proportion of the population deemed poor decreased only slightly from 28.8 percent in 2006 to 27.9 percent in 2012.
 
Balisacan said the big challenge is ensuring that the growth process is inclusive.  “We mean that a lot more are able to participate in the growth process, but all benefit from the growth, particularly the poor.”
 
He pointed out that more needs to be done and over the past three years, the Aquino administration has been working to promote rapid, sustainable and inclusive growth.
 
“We have learned useful lessons along the way. Good governance has proven to be an effective platform upon which development strategies should be implemented.  Macroeconomic—fiscal, financial, external—and political stability fuels positive expectations that lead to growth.”
 
“Economic growth is necessary but not sufficient for poverty reduction. Growth strategies need to have geographic and sectoral dimension to ensure inclusivity.  And disasters, both natural and man-made, can negate the gains and even push back development,” said Balisacan.
 
NEDA is currently updating the Philippine Development Plan 2011-2016 to identify gaps and refine strategies in order to achieve development targets.
 
Balisacan noted that government provides enabling conditions for the private sector to invest in productive sectors of the economy.
 
“The government advances equity goal by broadening access to opportunities through connectivity and human development. The strategies and actions to achieve inclusive growth are doable within the plan period, especially in the second half of this administration.”
 
“We are not giving up on the twin goals of rapidly increasing employment opportunities to substantially reduce unemployment and poverty as close as possible to our Millennium Development Goal (MDG) commitment,” said Balisacan.

Philippine exports slid 0.8% in May

Philippine export earnings in May 2013 posted a slight drop of 0.8 percent to $4.891 billion from $4.932 billion recorded in the same period last year.

The National Statistics Office (NSO) attributed the drop to the negative growth of five major commodities such machinery and transport equipment, ignition wiring sets, articles of apparel and clothing accessories, electronic products and metal components.
The aggregate merchandise exports for the first five months of 2013 showed a decrease of 6.0 percent from $22.445 billion in 2012 to $21.093 billion in 2013.

 Accounting for 35.4 percent of the total exports revenue in May 2013, electronic products emerged as the country’s top export with total receipts of $1.731 billion, down by 9.3 percent from $1.908 billion registered last year.

Semiconductors posted earnings worth $1.39 billion, down by 1.9 percent from $1.41 billion registered in May 2012.

Other manufactures recorded as the country’s second top export with revenue valued at $396.42 million, up by 36.5 percent compared to $290.32 million in same period a year ago.
Ranked third in May 2013 was machinery and transport equipment with earnings amounting to $343.85 million, down by 40.4 percent from its year ago level of $577.09 million
Export of other mineral products posted a 189 percent growth to $332.14 million from $114.72 million recorded in the same month last year.
Woodcrafts and furniture with export revenue of $306.92 million, up by 74.7 percent followed as the fifth top export earner in May 2013.
Other tope exports were chemicals with export earnings of $229.26 million, up by 48.0 percent; metal components with export receipts of $138.07 million lower by 1.1 percent; petroleum products registering the highest year-on-year change of 521.3 percent to $129.66 million; articles of apparel and clothing with proceeds billed at $128.51 million down by 14.7 percent; and ignition wiring sets with total receipts of $109 million down by 5.4 percent compared to same period last year. 

Philippines ranked 90 out of 142 countries in list of most innovative nations

The Philippines has moved up five notches on the global list of the most innovative nations but it will have to redouble its efforts if it wants to catch up with Southeast Asian neighbors.

The country was ranked 90 out of 142 countries in the Global Innovation Index (GII) 2013, up from 95 in 141 countries last year. In 2011, the country was in the 91st position among 125 countries.

The GII 2013 report ranks world economies’ innovation capabilities and results in recognition of the key role of innovation as a driver of economic growth and prosperity.

It looked at 142 economies around the world, using 84 indicators including the quality of top universities, availability of microfinance, venture capital deals, and gauged both innovation capabilities and measurable results.

The Philippines garnered 31.2 out of a total score of 100 in the global innovation index compared to last year’s score of 29 to move up from 95th place to 90th this year.

In the Southeast Asia and Oceania region (SEAO), the Philippines was ranked 14th most innovative out of 16 economies, behind Vietnam ranked 76th and Indonesia (85th), but ahead of Sri Lanka (98th) and Cambodia (110th).

The top three innovators in the SEAO for this year are Hong Kong (ranked seventh in the world, from last year’s eighth place), Singapore, (eighth place from third), and New Zealand (17th place from 13th).

The rest, in order of regional ranking, are South Korea (ranked 18th in the world), Australia (19th), Japan (22nd), Malaysia (32nd), China (35th), Thailand (57th), Mongolia (72nd), and Brunei Darussalam (74th).

Based on innovation output, the Philippines got a score of 30 out of 100 to rank 77th in the world, and scored 32.3 to rank 108 in innovation input.

The country’s innovation efficiency ratio was regarded by the report as one of the country’s strengths. It earned 0.9 with the highest score of 1.13 given to Mali for a ranking of 24th globally.

The index also graded countries individually based on more than 80 indicators of innovation.  Among the Philippines’ perceived innovation weaknesses are those dealing with political stability, business environment, ease of starting a business, ease of resolving insolvency, expenditure on education, research and development (R&D), ease of getting credit, and foreign direct investment inflows.

Cited as areas of strength include the percentage of graduates in science and engineering, market capitalization, business-financed R&D, joint-venture and strategic-alliance deals, the percentage of high- and medium-high technology manufacturers, and knowledge diffusion.

Making it to the top 10 of the GII 2013 are Switzerland with a score of 66.6 out of 100 in first place, followed by Sweden (61.3), the United Kingdom (61.2), the Netherlands (61.1), the United States (60.3), Finland (59.5), Hong Kong (59.43), Singapore (59.41), Denmark (58.3), and Ireland (57.9).

“The results of the GII provide testimony to the global nature of innovation today. The top 25 ranked countries on the GII are a mix of nations from across the world-North America, Europe, Asia, Oceania and the Middle East. While high-income economies dominate the list, several new players have increased their innovation capabilities and outputs,” said Soumitra Dutta, co-editor of the report.

Dutta added: “On average, high-income countries outpace developing countries by a wide margin across the board in terms of scores; a persistent innovation divide exists.”

Bruno Lanvin, the report’s co-editor, said: “Innovation is rapidly becoming a rallying symbol for forces of progress and reform around the world. Although our findings show that daunting challenges remain for many new players, we also see exciting examples of innovation success, including in some of the poorest countries. This is a source of optimism about the future of global innovation and economic recovery.”

Filipino consumers attracted to buy products with free gifts

When it comes to shopping, Filipino consumers would most likely be attracted to buy products that come with free gifts, according to a new online study from leading global information and insights provider, Nielsen.
 
The Nielsen survey of more than 29,000 Internet respondents in 58 countries revealed that 76 per cent of Filipino respondents say that products with free gifts are more attractive to buy, exceeding the Asia Pacific average of 58 per cent.
 
With the exception of Greece (74%), developing countries such as Vietnam (75%) comprised the list of countries that responded most strongly in favor of receiving free gifts.
 
“The allure of good product promotions is strongest in developing countries such as the Philippines where practicality and creativeness are needed in order to stretch the budget,” said Stuart Jamieson, managing director of Nielsen Philippines.
 
“Filipinos may be ready to spend but still they are on the lookout for the best deals and promos. Offering extras or gifts to consumers will get them to buy a product over another, “ said Jamieson.
 
In the survey, it was further revealed that more than 80 per cent of Filipino respondents shop around in order to buy the most favorable product.
 
 While various forms of media are available as source of information on products, the television is the dominant source of information for Filipino respondents. 
 
The respondents prefer to get information from television on cosmetic skin care, food and beverage, personal care, health care medicine, household product and home appliance.
 
Filipino respondents choose the Internet as source of information for cars, while magazines are the favoured information source for jewelry and in-store display  or promotion for clothes.
           
The Nielsen report also brings to light the consequential role advertising has on influencing consumers’ purchasing decisions. Two thirds of Asia Pacific consumers say that advertising influences their preference for a brand – the highest in the world and 12 points above the global average of 55 percent. 
 
This was especially pronounced in Korea and the Philippines, where around four in five consumers said commercials increased their brand preference, followed by Indonesia, India and China.
 
Seventy three per cent of Filipino respondents agreed the image created by advertising influenced their decision to buy a product, nine points higher than the Asia Pacific average of 64 per cent and 19 points higher than the global average of 54 percent.
 
While more than half (51%) of Asia Pacific consumers said they would buy a product because they liked its commercial, less than half (48%) of Filipino respondents agreed.
 
 
“In this report, we found out that Filipino consumers seldom switch to another brand and remain devoted to their favorite shampoo (63%), deodorant (56%) and coffee (53%) brands,” added Jamieson