Construction activities surged in 2nd quarter

Construction activities in both the residential and non-residential sectors surged in the second quarter of the year as the total value hit P66.4 billion.
The National Statistics Office (NSO) reported that the construction industry recorded a total of 29,424 construction projects.
Residential-building construction recorded the bulk numbering to 21,360 or 72.6 percent of the total new construction projects.
Non-residential construction numbered 3,504 approved building permits accounting for the least of 11.9 percent of the total.
Additions, alterations and repair of existing structures with combined approved building permits of 4,560 was 15.5 percent of the total construction.
Residential building construction with value of P32.6 billion accounted for almost half (49.1%) of the total.
Non-residential construction reached P28.5 billion or 42.9 percent of the total value of construction.
Additions, alterations and repairs of existing structures with combined value of P5.3 billion was only 7.9 percent of the total.
Total value of construction from approved building permits for residential buildings was estimated at P32.6 billion with a total floor area of 3.3 million square meters, translating to an average cost of P9,754 per square meter.
Single-type recorded the most number of projects with 18,195 accounting for 85.2 percent of the total. Total value of construction for this type reached P15.4 billion covering a total floor area of 1.8 million square meters, translating to an average cost of P8,482 per square meter.
Apartment-type ranked a far second with 2,587 construction projects representing 12.1 percent of total residential construction.
This type of residential building had an estimated construction value of P5.4 billion with a total floor area of 686,000 square meters or an average cost of P7,816 per square meter.
Duplex-type building recorded a total of 497 construction projects or only 2.3 percent of the total residential construction. Total construction value for this type amounted to P1 billion and a total floor area of 91,700 square meters or an average cost of P11,318 per square meter.
Among regions in the country, CALABARZON (Region IVA) posted the highest number of construction projects with 6,826 accounting for 23.2 percent of the total.
This is followed by National Capital Region (NCR) and Central Visayas (Region VII) with respective shares of 13.2 percent (3,873) and 12.8 percent (3,775) of the total construction projects from approved building permits. 
The least number of construction projects was recorded for Autonomous Region in Muslim Mindanao (ARMM) with only 41 or 0.1 percent of the total.
At the provincial level, Cavite reported the biggest number of construction projects with 2,905 or 9.9 percent of the total. This is followed by the province of Cebu with 1,660 (5.6%) construction projects.

Philippines ranked 52nd out of 155 nations in logistics performance index

The Philippines has the high potential growth in supply chain as the country was ranked 52nd out of 155 nations in the logistics performance index last year better than its Asean neibhbors.
NEDA deputy director general Emmanuel Esguerra stressed that the logistics and transport industries are part of the Philippine Development Plan 2011-2016.
Esguerra said the government is promoting the country in attracting investments in logistics and infrastructure, full restructuring of ports, upgrading of quality and capacity, improvement of performance and efficiency of port operations, and promoting competition.
The plan also includes the development of ports facilities under public-private partnerships and adoption of comprehensive ling-term national transport policy that will guide restructuring of the transport sector into well-coordinated and integrated multi-modal transport system, said Esguerra.
The government also is drawing up a master plan for the transport sector that aims to bring down logistics costs and amend the cabotage law.
Transportation and Communications Undersecretary Rene Limcaoco said the plan is also aimed at providing interconnected transport systems and develop infrastructure to boost tourism.
The government is working with the International Finance Corp. (IFC), the investment arm of the World Bank, to implement pro-competitive shipping policies for the domestic shipping industry.
IFC is helping the government determine how to bring down the cost of shipping, especially of high-volume farm products, and helping farmers and agricultural workers ship their goods efficiently.
Limcaoco said the plan involves increasing competition, building more modern ports, reconfiguring port charges and modernize the country’s transportation infrastructure and bring down logistics cost by 14 to 15%.
Under the port modernization program, the DOTC will rehabilitate ports in Bicol, Aklan and Cebu while the Philippine Ports Authority (PPA) will rehabilitate ten tourism ports in various parts of the country.

DOTC plans to expand Cebu, Iloilo, General Santos, Cagayan de Oro ports into fully containerized ports. It is also looking at an interconnected transport system, the addition of the new urban mass transit system, a bus rapid transport system for each of Cebu and Metro Manila and the revival of the Pasig River ferry system via private partnership in 2015.
Limcaoco noted that the proposed P60-billion Central RoRo (roll-on/roll-off) spine system that will link Manila and Northern Mindanao expected to cut transport time to 20 hours from 48 hours.
The project will connect Mindanao to the islands of Panay, Cebu and Bohol via high-speed toll roads and catamaran vessels. Subject to a public-private partnership structure, the project is undergoing a feasibility study that would completed early next year.

“We are looking at amending the restrictive cabotage law in the Philippines to further bolster trade and lower the cost of shipping throughout our archipelago,” Limcaoco added.

Need to address the gap between the richest and the poorest Filipino households

A top official of the Philippine Institute of Development Studies (PIDS) has underscored the urgent need to address the gap between the richest and the poorest Filipino households in terms of health status.
PIDS president Dr. Gilberto M. Llanto said: “Despite the country’s significantly growing economy, the Philippines’ overall health indicators have not commensurately improved with that growth. The country is still suffering from high levels of non-inclusiveness and inequities in the aspect of health.”
September of every year was declared as Development Policy Research Month (DPRM) by virtue of Presidential Proclamation No. 247 signed on September 2, 2002, to underscore  “the need for promoting, enhancing, instilling, and drawing awareness and appreciation of the importance and necessity of policy research.”
The yearly observance of the DPRM aims to gain public support and wider understanding of the importance of policy research as a tool for national development and of the activities in line with it to help advance the quality and standard of policy research in the Philippines. 
Under the presidential proclamation, PIDS was designated as the overall coordinator of all the programs and activities of the DPRM.
Since its first observance in 2003, the annual DPRM focused on areas that the PIDS considers of national importance and therefore in need of utmost attention and support. 
Last year’s DPRM focused on “Regional Economic Integration and Inclusive Growth” to underscore the impact of greater regional economic integration and globalization, taking into account the impending establishment of the ASEAN Economic Community (AEC) in 2015.
The AEC is expected to bring the ASEAN countries together into a contiguous market and production base that will encourage inflows of foreign direct investment (FDI) into the region. 
Llanto said the Philippines has not been successful, however, in harnessing the gains from regional economic integration, particularly in reducing poverty and creating more jobs. 
This has been attributed by PIDS experts to the limited economic transformation, low levels of FDI, and lack of diversification of our export products.
In continuity with last year’s DPRM theme, this year’s theme of “Making Health More Inclusive in a Growing Economy” focuses on analyzing the country’s health sector and making it more inclusive.
“We need a more thorough look at our health sector through research.  PIDS and other international agencies like the Asia Pacific Observatory on Health Systems and Policies have conducted significant research into our country’s health sector particularly in health financing and services,” Llanto said.

Philippines is fastest growing economy in Southeast Asia

The Philippines is the fastest growing  economy in Southeast Asia as its the gross domestic product (GDP) grew by 7.5 percent in the second quarter of 2013 compared to the period last year. 
Socio-economic Planning Sec. Arsenio Balisacan stressed this significant economic growth is the fourth consecutive quarter that the GDP has been expanding above 7 percent.
“We have been experiencing growth of above 6 percent since the first quarter of 2012,” noting that the second quarter expansion was above the 6-7 percent target set by the Development Budget Coordination Committee (DBCC) this year,” said Balisacan.
While the first quarter growth was slightly higher at 7.7 percent, this 7.5 percent second quarter growth is well within the target range of 7 to 8-percent GDP growth as originally outlined in the Philippine Development Plan or PDP for 2011 to 2016.
“This only confirms that the Philippine economy is now on a higher growth trajectory and the fastest growing economy among emerging economies in the ASEAN region,” said Balisacan.
The 7.5-percent growth, which is the same as that of China, surpasses the growth rates of the other economies in the ASEAN region.
Indonesia grew by 5.8 percent, Viet Nam by 5 percent, Malaysia by 4.3 percent; Singapore by 3.8 percent, and Thailand by 2.8 percent.
“Our growth rate is significantly higher than that of Hong Kong with 3.3 percent, Japan with 2.6 percent, Chinese Taipei with 2.5 percent, and South Korea by 2.3 percent,” said Balisacan.
Baliscan also pointed out that the composition of Philippine economic growth shows signs of an economy that is in the process of rebalancing, moving from being largely consumption-driven to becoming investment-led and industrialized, with the ability to provide higher quality jobs for Filipinos.
Over the last three quarters, capital formation has been growing more rapidly than household consumption and the growth of industry has so outpaced that of the services sector, said Balisacan.  Double-digit growth rates were noted in fixed capital and the manufacturing subsector in the last quarter.
On the demand side, household and government spending account for the bulk of GDP as  investments were growing and taking the lead in the medium term, given its double-digit growth for the past two quarters, said Balisacan.
“We are able to grow at a fast pace despite the contraction in exports.  This internal dynamism indicates greater consumer and business confidence in the domestic economy, as we have continued to keep our macroeconomic fundamentals in check.”
“While other economies that were growing at a fast rate are now decelerating due to global slowdown, the Philippine economy has shown an ability to withstand external shocks,” said Balisacan.
However, Balisacan underscored the need to address the agriculture sector which slightly contracted for the first time since the first quarter of 2012, even as some subsectors within agriculture posted growth.
Corn and palay production declined by 25.9 and 1.8 percent, respectively, in the second quarter of 2013 due to the intense heat experienced in Ilocos and Cagayan Valley regions and farmers harvesting their crops in advance in anticipation of the drought. 
Balisacan said the strong performance of various subsectors has tempered the contraction in the agriculture sector. 
The fisheries subsector, which comprises almost one-fifth of the sector, grew by 3.3 percent, while poultry and livestock expanded by 6 and 3.9 percent, respectively. 
The contraction in agriculture confirmed NEDA’s earlier observation in the April 2013 round of the Labor Force Survey where employment in agriculture-related activities registered a loss of around 624,000 workers from a year ago, compared to about 224,000 and 380,000 additional employment generated in the industry and service sectors, respectively.
Balisacan said the seasonality in the agriculture sector poses a challenge to growth and employment.  He stressed that need to diversify agricultural production and to move towards further processing of agricultural products particularly food.
“We are pleased that overall, our economic performance in the second quarter of 2013 indicates that we are on track with our targets. Our strategic initiatives as outlined in the PDP continue to be implemented and are bearing fruit,” he said.
Balisacan said that with strong macroeconomic fundamentals, the country has the means to manage risks that arise with volatilities, including those of the stock market and the Philippine peso. 
He also noted that inflation remains stable, interest rates continue to be low and with strong current account to cover 12 months worth of imports. 
“The increased diversification of exports as indicated by the decline in the share of electronic products from 70 percent to 50 percent of total exports has made us less susceptible to trade-related shocks.”
“While we are not completely immune to external shocks, our positive actions that have facilitated economic restructuring and rebalancing have given us greater resiliency.”
Balisacan said that the government is committed to sustaining this growth and making it more inclusive so that every Filipino benefits from and contributes to development. 

Philippine imports down 4.8% in June

Philippine merchandise imports in June 2013 posted a 4.8 percent decline to $4.86 billion from $5.10 billion in the same period last year.
The National Statistics Office (NSO) attributed the drop in imports to the negative growth in six out of 10 major commodity groups such as transport equipment, electronic products, cereals, telecommunication equipment and electrical machinery, iron and steel, and plastics.
Total imports for the first half of 2013 declined by 3.8 percent amounting to $29.615 billion compared with $30.786 billion in the same period last year.
Accounting for 22.6 percent of the aggregate import bill, electronic products were the top imported commodity in June 2013 with payments amounting to $1.096 billion, down by 24.8 percent over last year’s figure of $1.459 billion. 
Imports of semiconductors decreased by 28.7 percent to $812,47 million from $1.139 billion in same month a year ago.
Mineral fuel and lubricants registered the highest import annual growth rate of 30.2 percent to $1.06 billion from $818.38 compared to last year.
Transport equipment was the country’s third top import for the month with 8.7 percent share to total imports valued at $423.96 million in June 2013, down by 33.7 percent.
Industrial machinery and equipment , contributing 6.4 percent to the total import bill was the country’s fourth top import for the month amounting to $312.47 million, up by 6.5 percent.
Fifth in rank and with 3.3 percent share to the total imports, other food and live animals recorded $161.47 million worth of imports, higher by 6.8 percent from its year ago level of $151.24 million.
Other top imports in June 2013 were plastics valued at $125.77 million, cereals, $115.28 million; iron and steel, $113.77 million; and telecommunication equipment and electrical machinery, $93.48 million. 

Philippines enjoys favorable investor sentiment

The Philippines is enjoying a favorable investor sentiment like most of the Asian countries, according to the latest Manulife Investor Sentiment Index (Manulife ISI).
Investor sentiment is running high in the Philippines on the heels of its investment upgrade by Fitch and Standard & Poor’s and strong economic growth despite the sluggish global economic environment.
“The local macroeconomic environment remains supportive of an uptrend of the investment and credit cycle given low interest rates and favorable consumer and business confidence,” said Aira Gaspar, chief investment officer, Manulife Philippines.
“While the Philippines is not immune to shifts in risk sentiment, swings in global liquidity flows are not expected to undermine the structural factors that underpin the nation’s positive growth prospects,” said Gaspar.
Indren Naidoo, President and CEO of Manulife Philippines noted that the Philippine economy continues to expand despite difficult global economic conditions.
“As more and more investors come to appreciate the Philippines’ solid economic fundamentals, the demand for investment solutions that benefit from the resiliency of the local economy is likely to grow.”
Amid this strong investor sentiment backdrop, Manulife Philippines introduced two new peso-denominated variable unit-linked investment funds: the MANULIFE Peso Dynamic Allocation Fund and the MANULIFE Peso Balanced Fund, which represent new opportunities for diversification for investors that have the ability and willingness to take on the blended benefits and risks of investing in Philippine fixed income and equity strategies.
The new funds seek to achieve long-term capital growth through investment in diversified portfolios of peso-denominated fixed income securities, securities listed on the Philippine Stock Exchange and pooled funds that invest in these securities and other liquid fixed income instruments.
“The Philippine growth story has certainly opened a lot of exciting opportunities for investors looking to optimize their return on investment,” said Naidoo.
“Manulife’s wide variety of professionally managed variable unit-linked investment funds provides investors with investment options that have the potential to yield optimal medium- to long-term gains while also matching their risk and return objectives,” he added. 

Foreign buyers association seeks government assistance to revive garments industry

The Foreign Buyers Association of the Philippines (FOBAP) is seeking government assistance to support the implementation of three projects worth P5 million in a bid to revive the garments  and hardgoods industries in the country. 

FOBAP president Robert Young said the funding would be used for mapping of garments and hardgoods sectors, the compliance program and “invite the CEO ” project.

Young explained that factories need to be compliant in implementing the requirements and regulations such of child labor, clean and safe environment and minimum wage.

He also cited the need for the revival of so-called “invite the CEO” project which proved effective in regaining foreign buyers.

Young recalled that such project was implemented during the 1970s when the country experienced crisis and foreign markets stopped buying.

With the implementation of these three projects, Young is optimistic that the garments sector can regain at least a fourth of all the jobs lost.

“We lost about 300,000 to 500,000 jobs in the past six to seven years in the garments sector alone. We just hope to get one-fourth of that or 150,000 to 200,000 jobs,” he said.

Young recalled that the Philippine garments industry reached peak revenues in mid ’80s to ’90s.

“The decline started when the US garments quota was lifted. China opened their international trade and other countries like Sri Lanka, Vietnam and Bangladesh followed. All of them quoted lower prices than the Philippines,” he added.

Demand for gold and silver jewellery starts picking up

Philippine demand for gold and silver jewellery has started picking up in the second semester of the year, boosting hopes for a 30-percent revenue growth in 2013.

Cecille Ramos, chairman of the board of the Meycauayan Jewelry Industry Association (MJIA), said they received more orders since June after the prices of these metals went down.

“The prospect for the second half is good because the price of gold went down from P2,300 to P1,850 while that of silver from P45 to P28,” she said.

Ramos said many buyers, especially institutional ones, take advantage of lower prices of gold and silver this early in anticipation that costs will again increase through the Christmas holiday caused by higher demand. She expects that growth this would be higher than 2012 when gold prices reached a peak.

Ramos pointed out that demand in key export markets United States and Europe remains weak, while some exporter members turned to the local market and others resorted to retrenchment to survive weaker export sales.

Local jewelry producers also participate in more domestic trade fairs to get more buyers.   “They are also promoting their products using social networking sites,” she said, citing a member which received more than a thousand orders after posting a product design on Facebook

PCA tests B5 biofuel blend for fuel economy and power efficiency

The Philippine Coconut Authority (PCA) is road testing  the B5 biofuel blend to determine its fuel economy and power efficiency. The new oil product contains 3 percent more coco methyl esther from its original 2% (B2) blend.

PCA Administrator Euclides Forbes said that increasing the biodiesel content from 2% (B2) to 5% (B5) will directly benefit our coconut farmers because (CME), which is a component of coconut oil, would be sourced locally.
“With the 3% increase in biodiesel blend, the country could save as much as P 10 billion. It would also boost farmers’ income, help in climate change mitigation, and improve the Philippine economy since currency would circulate within rather than exit the country,” said Forbes.
Forbes said that B5 means greater demand for coconut oil (CNO), hence the move would consequently generate P 19.6 billion income and save as much as P 15.5 billion in fuel displacement.
Increasing the CME blend from 2% to 5% would employ about 1,099 CME plant workers, 13,183 coconut oil milling workers, and 23,070 far workers. The coconut farmers will also be the beneficiaries of P4.8 million annual lien collection of the Social Amelioration and Welfare Program (SAWP).
“Switching to B5 targets to reduce the dependence on imported fuels and at the same time protect human health, the environment, and ecosystems in line with sustainable economic growth that would pave the way for increased income,” added Forbes.
B5 is being tested on seven public utility jeepneys (PUJs) belonging to transport groups selected by PCA and the Department of Energy (DOE).
The test jeepneys will be assessed at the North Motor Vehicle Inspection Center (NMVIC) of the Land Transportation Office (LTO) for their road worthiness and compliance to emission standards.
The Energy Secretary sits as the chairman of the Biofuels Board and has the authority to recommend to the President the increase from 2% to 5% of the biodiesel blend.
In 1983, the DA-PCA spearheaded scientific studies on the use of coco biodiesel as fuel, in coordination with the Industrial Technology Development Institute (ITDI), Philippine National Oil Company (PNOC-ERDC), National Power Corporation (NPC), and the Department of Science and Technology (DOST).
In May 2001, the Department of Agriculture and the PCA launched a Biodiesel Development Project that tests the viability of coconut biodiesel as engine fuel. Test results showed approximately 50% reduction on smoke emissions.
Forbes said the visible cloud of black smoke consisting of carbon and sulfur particulates is diminished by as much as 80% using the B5 blend. Carbon dioxide, a greenhouse gas emitted by vehicles, largely contributes to global warming.
“The DA-PCA continues to implement its massive planting and replanting programs to ensure the increased productivity and sustainable supply of biofuel feedstock,” said Forbes.

PIDS bares strategy to transform manufacturing industries into regional hub

The Philippine Institute for Development Studies (PIDS) has unveiled a government strategy to transform domestic manufacturing industries into a regional production hub and enhance global competitiveness.
PIDS senior research fellow  Rafaelita Aldaba disclosed that the first phase of the roadmap covering 2014 to 2017 calls for rebuilding the capacity of existing industries, strengthening emerging industries, and maintaining the competitiveness of advantage industries.

The second phase, from 2018 to 2021, will see a shift to high-value-added activities, investments in upstream industries as well as the linking and integrating of small and medium enterprises (SMEs) and large enterprises for broad-based industrial development.

The third phase, encompassing the years 2022-2025, envisions the Philippines’ deepening participation in regional integration by serving as hubs in production networks for industries like auto, electronics, machinery, garments, and food, Aldaba said.

The roadmap can be accomplished with an action plan for the successful transition of the country into a dominant production player in Asia.

The plan includes closing the supply or value-chain gaps for key industries, such as establishing supply hubs for raw and natural materials for the furniture sector, and increasing the tool and die sector’s access to raw materials, equipment, and software.

For the paper industry, focus can be on expanding the fiber raw material base and developing massive tree plantations and commercial agro-forestry areas integrated with virgin wood pulp production.

The second step is cultivating the domestic market base of the transport sector. This would entail providing fiscal and non-fiscal incentives to rebuild the domestic automotive market, implementing Republic Act 9295 mandating the retirement of old shipping vessels, and developing the local parts support industries for motorcycle assembly to reduce the high cost of importing these parts.

The third part of the action plan focuses on skills training. Aldaba said more training on design, tool making, prototyping, molding, and die-casting is needed in the auto parts and tools and die sectors, while the furniture sector has to upgrade the supervisory and managerial skills of its staff for improved productivity.

She suggested that the Technical Education and Skills Development Authority could look into increasing vocational training activities for iron and steel workers, she added.
The action plan likewise highlighted the importance of the fourth step-SME development and technological innovation.

Aldaba urged greater support for SMEs’ development by providing them better access to finance, setting up incubation facilities, and clustering these sectors: auto parts, motorcycle parts, furniture, rubber, metal casting, tools and die, chemicals, iron, and steel.

Establishing quality-testing facilities will likewise bolster the small auto and auto parts, motorcycle assembly, motorcycle parts, furniture, and rubber enterprises.

Supporting R&D facilities and industry-academe linkages for new product development can boost the metal casting, tools and die, engineered bamboo, rubber, iron and steel, chemicals, furniture, paper, and plastics industries.

This four-pronged action plan should be complemented by aggressive marketing to attract investments particularly in new technologies, measures to address the high cost of power and domestic shipping, regulations to streamline and automate government procedures, and steps to ensure a competitive exchange rate, Aldaba continued.

At the same time, there should be a mechanism where government, industry, and private groups can collaborate on cluster-based interventions to increase supply of skilled workers, encourage technology adoption, and improve regulations and infrastructure.

Aldaba drew up the roadmap following several consultations with private and government stakeholders from January to July 2013.