Undersecretary Ponciano C. Manalo, Jr. Department of Trade ...€¦ · 0 51 51 153 192 0 0 251 222...

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Undersecretary Ponciano C. Manalo, Jr.

Department of Trade and Industry – Industry Promotion Group Rizal Ballroom A, Makati Shangri-La Hotel

February 05, 2015

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PHILIPPINES

Asia’s Rising Tiger

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Sustained Economic Growth

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Sustained Economic Growth

GDP (2014) 6.1%

Headline Inflation (2014) 4.1%

GDP (2013) 7.2%

Headline Inflation (2013) 3.0%

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Sustained Economic Growth

Contributor to 2014 GDP Growth

PH GDP Growth

2010 7.7%

2011 3.7%

2012 6.8%

2013 7.2%

2014 (FY) 6.1%

2014 (4Q) 6.9%

Supply

Agri, Fishery and Forestry 1.9%

Industry Manufacturing

7.5% 8.1%

Services 6.0%

Demand

Household Final Consumption

Expenditure 5.4%

Government Final

Consumption Expenditure 1.8%

Capital Formation

Fixed Capital Formation

1.1% 8.6%

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Renewed Global Demand for

Products Made in the Philippines

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Merchandise Exports

Steady Export Growth

Service Exports

2013: US$56.7 Billion (8.8% higher than 2012)

Jan-Nov 2014: US$56.9 Billion

(10% higher than Jan-Nov 2013)

2013: US$22.6 Billion

(10.8% higher than 2012)

anchored on BPM sector that generated revenues of US$16.0 Billion and direct

employment of 917,529

Jan-Sept 2014: US$17.9 Billion

(9.2 % higher than Jan-Sept 2013)

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Steady Export Growth 2014 Philippine Merchandise Export Performance

Japan 22.6%

USA 14.1%

China 13% Taiwan 4%

Hong Kong 9%

Republic of Korea 4,9%

Germany 4.3%

Taiwan 4 %

Thailand 3.8%

Netherlands 3.1%

Others, 14.8%

Jan-Nov 2014 Top Export Markets

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Philippines is now a Preferred

Investment Destination

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Favorable Investment Climate

BOI-PEZA Approved Investments In PHP bn

+69.1%

+29.8% +2.3%

+10.4%

-14.5%

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Favorable Investment Climate

+69.1%

+29.8% +2.3%

+10.4%

-14.6%

Year Net FDI (USD billion)

2010 1.1

2011 2.0

2012 3.2

2013 3.6

Jan-Sept 2014 5.3 (+64.1% vs Jan-Oct 2013)

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Inbound Missions

In the first 3 quarters of 2014 alone, Japan

has already sent more than 40 missions to

the Philippines– 29% higher than the full

year figure of 2013.

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TIPI Philips Fairchild

Analog Sanyo On Semi Rohm

Samsung

Top chipmakers in the Philippines

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Hitachi Toshiba Fujitsu NEC

Largest Global HDD producers in the Philippines

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* Source: Survey Conducted by the US Chambers of Commerce in ASEAN, Manila Bulletin, September 4, 2012

Most Popular Expansion Destination

49% 19% 15%

11% 6% 3%

PH

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Philippines is Gaining Global

Competitiveness

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World Bank

Ease of Doing Business

Report 2015

World Economic Forum (2014/2015)

Global Competitiveness Index

Economic Freedom of the World

(2014 Annual Report)

2014 Index of Economic Freedom

Ease of Doing Business in the Philippines

+5 Out of 152 countries:

From #56 to 51

+13 Out of 189 countries:

From #108 to 95

+8 Out of 178 countries:

From #97 to 89

+7 Out of 144 countries:

From #59 to 52

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Philippines Indonesia Thailand Vietnam India

Less Linguistic / Communication

Problems 69.2 6.8 9.7 7.0 30.6

Easy to hire local staff (General

Worker/Staff/Clerk) 58.0 21.0 14.3 33.3 15.3

High Quality of Employees (General

Worker) 19.6 3.8 6.7 13.2 3.8

Easy to hire local staff

(Specialist/Engineer/Middle-Manager) 17.5 0.8 4.2 6.7 7.5

High Quality of Employees

(Specialist/Engineer) 15.4 1.9 5.1 7.7 7.8

High Employee Retention Rates 14.7 8.7 6.4 11.5 1.9

Tax Incentives (Corp Tax Holidays, etc.) 34.3 4.2 15.9 18.9 5.0

Source : 2013 JETRO Study

Appreciation of Investment Environment

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Appreciation of Investment Environment

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Credit Ratings Confirm Trust in Economy

BBB

Outlook:

Stable

BBB

Outlook:

Stable

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Transparency International (2014)

Corruption Perceptions Index

World Bank (2013)

Government Effectiveness Indicator

+9 Out of 177 countries:

From #94 to 85

+1 Out of 215 countries:

From #57 to 58

Strengthened Governance and

Anti-Corruption Measures

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The Philippine

Advantage

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Rich Talent Pool

Infrastructure Development

Critical Market Access

First-Class Lifestyle

Competitive Investment Incentives

The Philippine Advantage

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Asia’s friendliest country

8th World’s friendliest country ~ HSBC World Explorer Survey 2011 ~

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 ~

People – Our Greatest Asset

12th largest population in the world – 100 million

3rd largest English-speaking country

97.5% literacy rate

Over 40.1 Million labor force

24 yrs old average worker

23 yrs old median age

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Rich Talent Pool

• Educated and English Proficient

• Excellent Creativity

• Fast Learning Curve

• Highly Adaptable to Other Cultures

• High Level of Commitment and Loyalty

• Excellent Work Ethic

• Respect for Intellectual Property

Over 534,000 college graduates per

year:

• Business administration and related

fields

• Medical and allied

• Education and teacher training

• Engineering and technology

• Information technology

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Focus on Infrastructure Development

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Projects for Roll Out in the Next 12 Months

Rail Projects

Integrated Luzon Railway Project Phase 1

(North-South Commuter Rail)

Makati-Pasay-Taguig Mass Transit System

Loop

Other Projects

Regional Prison Facilities through PPP

North Luzon Expressway (NLEx) - South

Luzon Expressway (SLEx) Connector Road

Motor Vehicles Inspection System

Cavite-Laguna Expressway (CALAX)

Davao Sasa Port Modernization Project

Civil Registry System-IT Project (Phase II)

Tanauan City Public Market Redevelopment

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Critical Market Access

- Critical entry point

to over 600 million

people in the ASEAN

Market.

- Natural gateway to

the East-Asian

economies.

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Philippines’ GSP+ Status with EU

Grant of GSP+ Status

to the Philippines

by EU

Benefits

Market

Opportunities

• The European Union (EU) has approved the Philippines’ application for Generalized System of Preference (GSP) Plus status in December 2014 that will provide duty free entry to the EU for some of the most important PH exports.

• GSP+ preferences cover over 6,200 tariff lines including fruit and foodstuffs, coconut oil, footwear, fish and textiles.

• EU Concession significantly improves the attractiveness of the Philippines as a destination for new agricultural and manufacturing facilities for products that will now enjoy duty free access to the EU.

• Expected to increase the PH’s total exports to EU by nearly 12% and create an additional 267,000 jobs.

• Attracts new industrial investments in sectors where relatively high tariffs are being slashed to zero under GSP+.

• These include established Filipino exports that are labour intensive such as pineapple juice, garments, preserved fruits, tuna, fruit jams and jellies and footwear.

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Japan’s Support to the Philippine Industry Development

Japan expressed support to the Philippine initiative to develop an Industrial Development Roadmap and its aspiration to be a hub in ASEAN for manufacturing and human resources development;

Both sides welcomed convening of the Philippines-Japan Industrial Cooperation Dialogue and confirmed to tackle priority issues such as automobile industries, services, SMEs and improvement of the business environment; and

Both sides agreed to develop an Action Plan to Enhance the Bilateral Industrial Cooperation.

Philippines – Japan Joint Statement on Industrial Cooperation

signed on 21 July 2014 wherein:

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Philippines – Japan Bilateral Merchandise Trade

Philippines-Japan Economic Partnership Agreement (PJEPA)

ASEAN-Japan Comprehensive Economic Partnership (AJCEP)

Regional Comprehensive Economic Partnership (RCEP)

(On-going Negotiation)

JAPAN, the country’s only bilateral FTA partner.

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Living / Lifestyle Environment

Democratic Country

Tourism.

“More Fun in the Philippines”

Affordable Luxuries

Second home to expatriates.

Openness to varied cultures.

Widespread global outlook.

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INCENTIVE BOI

(Executive Order No. 226, as amended)

CDC / SBMA

(Republic Act No. 7227 – Bases Conversion Devt Authority

AFAB

(RA 9728)

Income Tax Holiday

(ITH) 4 – 6 years (max of 8 years)

Exempted from all local and national taxes - value-added taxes, franchise taxes, excise and ad valorem taxes)

4 – 8 years

ITH Bonus 3 years provided the firm meets certain

conditions

Special Tax Rate of 5% on Gross Income

Special Tax Rate of 5% on Gross Income Special Tax Rate of 5% on Gross

Income after ITH period

Importation of Capital Equipment, Spare Parts and Supplies

0% duty-free Tax and Duty-Free 0% duty-free

Wharfage Dues and Export Tax, Duty, Impost and Fees

Exempted None Exempted

Simplification of Customs Procedures

Available

Employment of Foreign Nationals

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.

Others Domestic sales allowance of up to 30% of total sales;

Competitive Investment Incentives

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Investment Opportunities

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I. Preferred Activities

1. MANUFACTURING

o Motor Vehicles

o Shipbuilding including parts &

components

o Aerospace parts & components

o Chemicals (oleo, petro & chlor-alkali)

o Virgin paper pulp

o Copper wires & copper wire rods

o Basic iron & steel products

o Tool and Die

2. AGRIBUSINESS AND FISHERY

3. SERVICES

4. ECONOMIC & LOW COST HOUSING

5. HOSPITALS

6. ENERGY

7. PUBLIC INFRASTRUCTURE & LOGISTICS

8. PPP PROJECTS

II. Export Activities

III. Mandatory List

Manufacture of export products

Services exports

Activities in support of exporters

IV. ARMM List

Investment Priorities Plan 2014

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Investment Opportunities - Japan

1. Manufacturing

• Motor Vehicles

• Shipbuilding including parts and components

• Aerospace parts and components

• Chemicals (oleo, petro and chlor-alkali)

• Tool and Die

2. Agribusiness and Fishery

3. Services

• IT/BPM and Game Development, Animation

4. PPP Projects

• Infrastructure Development

5. SME Centric Programs

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Philippines – Japan Bilateral Merchandise Trade

Key Exports to Japan

1. Construction

Materials/Construction Related

Products

2. Food Products

3. Lifestyle and Homestyle

4. Health and Wellness Products

5. IT & Creative Services

6. Motor Vehicle Parts

7. Wearables

8. Minerals

9. Coconut Products

10. Chemicals

11. Electronics and Semiconductors

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PH – JP BILATERAL MERCHANDISE TRADE Comparative of 2013 and 2014 (Jan – Sept)

in Billion US$

*Covers Y2013 (January to December)

Philippines – Japan Bilateral Merchandise Trade

PH’s TOP EXPORT TO JAPAN / JAPAN’S IMPORT TO THE PH 2013 and 2014 (Jan – Sept)

Source: DTI-EMB & National Statistics Office

2013 2014 % Share

(2014) (Jan-Sept) (Jan-Sept)

Export 12.0 12.8 22.6

Import 5.2 *not available yet

Total Trade 17.27*

PH’s Export to JP JP’s Import to the PH

• builders' joinery and carpentry of wood, n.e.s.

• Ignition wiring sets and other wiring sets for vehicles, aircraft or

ships

• Photosensitive semiconductor devices, including photovoltaic

cells; light emitting diodes

• Copper ores and concentrates

• Glycerol

• Bananas, including plantains, fresh or dried

• Digital monolithic integrated circuits

• Refrigerated vessels

• Nickel oxide sinters and other intermediate products of nickel

metallurgy

• Other sulfide; polysulfides

• Machine parts and accessories

• Motor vehicles for the transport of ten of more persons,

including the driver

• Motor vehicle parts and components

• Sulphuric acid; oleum

• Parts of the goods and other electrically operated machines

• Electrical apparatus for switching or protecting electrical

circuits, or for making connections to or in electrical circuits

• digital monolithic integrated circuits, n.e.s.

• Flat-rolled products of iron or non-alloy steel, plated or coated

with tin

PH exports to Japan in the

first 11 months of 2014,

valued at US$12.9 billion,

already accounts for

107.5% of full 2013

performance.

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Japanese Investments in the Philippines

Year

(Jan – Sep)

IPA-Approved

Foreign

Investments

% Share Rank

2013 366.34 12.2 3rd

2014 333.95 16.1 1st

IPA-Approved Foreign Investments from Japan Comparative of 2013 and 2014 (January – September)

in Million US$

BSP Average FOREX for US$1.00

2013 (Jan-Sep): 40.0570;

2014 (Jan-Sep): 44.2561

2013

(Jan – Sep)

• US$367.48

2014

(Jan – Sep)

• US$307.14

MANUFACTURING SECTOR -

top recipient of Japan’s

investment pledges in 2013 and

2014.

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Doing Business in the Philippines

The Philippines is a ready market

Global acceptance of the Philippines as an

investment destination

The Philippines is gaining competitiveness

Filipinos are dependable, hardworking,

resilient

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