Investment Grade Philippines:
Seizing Opportunities to Achieve Inclusive Growth

September 2013

0
Table of Contents

I.

II.

III.
IV.
V.
VI.

Macroeconomic Performance and Outlook...........................................
I. Macroeconomic Performance and Outlook

2
Real Sector

Secretary Arsenio M. Balisacan
National Economic and Development Authority

3
The Philippine Economy Sustained Robust Growth in H1 2013

2012

H1 2013

6.8%

GDP Growth

H1 2012
6.4%

7.6%

Share to
G...
Sound Macroeconomic Fundamentals Supported this
Remarkable Performance
Favorable Interest Rate and Sound Banking System

L...
Our Competitiveness also Increased

Global Competitiveness Index (GCI) Report
Country

2013-2014 2012-2013 2011-2012
GCI R...
We are on Track with Respect to our Economic Targets;
the Present Challenge is to Improve Social Outcome Targets

Philippi...
Particularly Employment Generation

Ave 2010

Ave 2012

Ave 2012
(Jan, Apr & Jul)

Ave 2013
(Jan, Apr & Jul)

Labor Force ...
And Poverty Reduction to Achieve Inclusive Growth
First Semester Poverty Incidence Among Population

Poverty Incidence Amo...
For the Midterm Assessment of PDP 2011-2016, We are Taking
Stock of Lessons Learned in the past 3 years
Good governance ha...
Thus, Positive Actions with Sectoral and Spatial Dimensions
will be Undertaken to Achieve Inclusive Growth

Infrastructure...
We also Have our Priority Sectors to Support Inclusive Growth
Philippine Development Plan 2011 - 2016

Midterm Assessment
...
Given these Concrete Strategies, We are Confident that
Growth will Continue in 2013 and Beyond

2012
Actual

H1 2013
Actua...
Supported by the Following Growth Drivers

Production

Expenditures

Strong performance of agri-based manufacturing, and r...
We also Remain Vigilant Against the Following Near-term Global
and Domestic Risks to Growth…

Weather disturbances (e.g., ...
…while Taking Advantage of Opportunities

Improvement in the global economic environment
–

Sustained consumption growth i...
Monetary, External and Financial Sectors

Governor Amando M. Tetangco, Jr.
Bangko Sentral ng Pilipinas

17
Policy/Reform Milestones and Their Impact

Policy
Monetary
Sector

Maintained the BSP's key policy interest rates at 3.5 p...
Monetary Policy Settings Remain Supportive of
Non-Inflationary Growth
Prudent monetary policy has been effective
in safegu...
Robust External Position Despite Lingering Global
Economic and Financial Uncertainties
BOP Position and Current Account re...
Sound and Stable Banking System
Bank capitalization remains above regulatory standards
and international norms

Quality of...
State of Financial Inclusion in the Philippines
Expanding number of branches and ATMs
from 2009 to March 2013, especially ...
BSP’s Performance

TARGET/
FORECAST

ACTUAL
2012

2013

2013

3.2 percent

2.8 percent
(Jan-Aug)

4 ± 1 percent

1. Pruden...
Enhancing Corporate Governance

Revised existing regulations on corporate governance in line with international best pract...
Intensifying Efforts toward Financial Inclusion

Policy, Regulation and
Supervision

Financial Education and
Consumer Prot...
Macroeconomic Outlook for 2013

Actual

Projections

2012

2013

2013

GDP Growth (%, 2000=100)

6.8

7.6 (H1)

6.0 – 7.0 ...
Key Risks to Inflation

Downsize risks:
Uncertainty over the strength of the global economy and its impact on internationa...
BSP Policy Directions

Monetary sector
Sustain an appropriate
monetary policy stance
consistent with the BSP’s
primary man...
Revenue Collection and Debt Management

Secretary Cesar V. Purisima
Department of Finance

29
Revenues Grew Faster than Nominal GDP
While nominal GDP grew 8.9% in 2012, total revenues and tax revenues rose faster at ...
Lower than Programmed Deficit for H1 2013
Revenues were boosted by the implementation of the Sin Tax Law

In Php Bn

2012
...
Improved Fiscal Position
…through a combination of improved tax effort, reduction in interest cost and more efficient expe...
Impact of the Sin Tax Law Implementation
Excise tax revenue collections from alcohol and tobacco increased by 46.1% in the...
Achieved Investment Grade from Major International Rating Agencies
The improvement in the fiscal health of the economy is ...
Tightening of Credit Default Swap (CDS) Levels
Investor confidence in Philippine obligations is now ranked closer to Thail...
Impact of Investment Grade Rating on Private Sector
Access to cheaper borrowings to finance expansion

For the first 7 mon...
2013 Outlook
Deficit to go down to 2.0% of GDP in line with the fiscal sustainability program

2012

2013

Growth Rate

Ac...
2014 Fiscal Program
The new budget is in line with the medium-term fiscal deficit program of 2.0% of GDP in 2014

In Php B...
Prudent Liability Management
Increasing reliance on domestic financing sources and improved debt sustainability

NG Financ...
Consolidated Public Sector Deficit
…to remain low at 0.8% of GDP in 2014 due to lower NG deficit and improved GFI and LGU ...
Revenue Enhancement Measures
Focus to ensure that positive momentum in government fiscal finances continue

Full implement...
Expenditure Management
Secretary Florencio B. Abad
Department of Budget and Management

42
Assessment of the Latest Economic Performance
Resurgence in public spending has contributed to the growth of our domestic ...
NG Disbursement Performance, January to June 2013

PARTICULARS

Levels (Php Bn)
H1 2012
H1 2013
Actual
Actual

2012 vs. 20...
NG Fiscal Outlook, FY 2013

Stronger bias towards more productive expenditures (MOOE and CO)
Particulars

Levels (Php Bn)
...
Major Government Spending Initiatives
Ramped-up investments for public infrastructures
Levels (Php Mn)

Particulars

Roads...
Major Government Spending Initiatives
Key investments for poverty reduction and equitable access to basic social services
...
Budget by Sector, FY 2003-2014

Continued significant increase in resources committed to Social and Economic Services
alon...
Expenditure Management Reforms
Significant expenditure management reforms have been initiated to implement the government’...
Moving Towards Performance-Informed Budgeting

With the Performance Informed Budget or PIB, each peso is presented alongsi...
Inclusive Development and Employment Generation

The government, through the budget, seeks to promote a new business model...
Medium-Term Fiscal Program, FY 2012-2016
Infrastructure spending to grow from 2.5% of GDP in 2013 to 5.0% in 2016
Particul...
Aquino’s Legacy: Ensuring the Irreversibility of Reforms

By the time its term ends in 2016, the Aquino Administration see...
II. Sectoral Performance and Outlook

54
Trade, Industry and Investments

Secretary Gregory L. Domingo
Department of Trade and Industry

55
Improved Business Environment Attracted More Investments

BOI – PEZA Approved Investments (Php Bn)
Jan-Jun
Agency

2011

2...
Improved Business Environment Attracted More Investments
Robust Performance in H1 2013

BOI-PEZA Approved Investments by I...
Continued Increase in Foreign Investments into the PH
Continued Increase in Foreign Investment Inflows into the PH
based o...
Sustained Investor Confidence

Strong Investor
Confidence on Domestic
Business Climate

BOI-PEZA facilitated the inbound m...
Merchandise Exports Gradually Recovering
Philippine Export Performance (January to June 2013)
PH’s merchandise exports hea...
Export Outlook for 2013
Export Targets: 2013 -2016*
ACTUAL**
2011
Value
(in US$ Bn)

TARGETS
2012

Growth

Value
(in US$ B...
Export Outlook for 2013
Industry leaders maintain a positive outlook for the rest of the year with year-end export growth ...
Policy Interventions to Support Exports
Creation of the Networking Committee (NC) on ASEAN Economic Community (AEC) 2015
–...
More Aggressive Export Promotion

Doing Business in Free
Trade Areas (DBFTA)

Regional Interactive
Platform for Philippine...
Policy Thrusts for 2013 and 2014

Industry Development
Program

To help ensure sustainable economic growth, the government...
Enabling Business Environment for Global Competitiveness

Philippine Business
Registry (PBR) and
Business Name
Registratio...
Enabling Business Environment for Global Competitiveness
Accreditation of Conformity Assessment Bodies. Accreditation is t...
Achieving Inclusive Growth through MSME Development

Big Push for MSMEs
Provides access to market and finance, programs
fo...
Achieving Inclusive Growth through MSME Development

Nationwide Industry Cluster Capacity Enhancement
Program (NICCE)

NIC...
Achieving Inclusive Growth through MSME Development

Shared Service Facilities (SSFs)

SME Roving Academy

The Shared Serv...
Empowering Consumers

Fair Trade Law Compliance (January to April 2013)

Total Number of DTI-Monitored Firms
Resolution Ra...
Empowering Consumers
Consumer Complaints Resolution (January to March 2013)

Performance

DTI

Business
Establishment

Num...
Agriculture and Fisheries

Secretary Proceso J. Alcala
Department of Agriculture

73
Midterm Milestones
Agriculture and Fisheries Sector

Posted record harvests in rice

Achieved significant reduction in ric...
Midterm Milestones
Agriculture and Fisheries Sector

Posted record harvests in corn

Average fish catch of a
commercial pu...
Midterm Milestones
Agriculture and Fisheries Sector

Maintained stable food prices
Maintained stable food prices
Inflation...
Agriculture and Fisheries Performance
First Semester of 2013

The agriculture and fisheries sector

GVA grew by 1.3% for H...
Agriculture and Fisheries Performance
First Semester of 2013

The sector posted modest farm output growth of 1.4% for H1 2...
Department of Agriculture Accomplishments
First Semester of 2013

Irrigation Network
Services

Farm-to-Market
Roads
Develo...
Department of Agriculture Accomplishments
First Semester of 2013

Marketing Support
Services

Facilitated establishment of...
Sector Targets
2013 and Beyond

Growth in Agriculture and Fisheries
Gross Value Added (GVA)

Attain and Sustain Self-Suffi...
Way Forward: Sector Priorities and Directions
2013 and Beyond

1 Attain and Sustain Food Security
2 Establish Enabling Env...
83
Attain and Sustain Food Security
Sector Priorities and Directions

The Philippine Food Staples Sufficiency Program (FSSP) ...
Establish Enabling Environment for Enhanced
Agriculture and Fisheries Competitiveness
Sector Priorities and Directions
Com...
Increase Agriculture and Fisheries
Climate Resiliency
Sector Priorities and Directions

In 2012, the Philippines adopted t...
Focus Agro-Industries for Inclusive Growth
Sector Priorities and Directions

Establish coconut agro-industrial hubs
Engage...
Focus Agro-Industries for Inclusive Growth
Sector Priorities and Directions

Develop fishery-based agro-industries
Regener...
Tourism

Secretary Ramon R. Jimenez
Department of Tourism

89
Mandate of DOT
As provided by the Tourism Act of 2009 (RA 9593)

Planning and regulatory agency in the development and pro...
International Visitor Arrivals

RANK

COUNTRY

1
KOREA
2
USA
3
JAPAN
4
CHINA
5
AUSTRALIA
6
TAIWAN
7
SINGAPORE
8
CANADA
9
H...
International Visitor Arrivals 2013 per Month

500,000

18.0%

15.5%
436,079

450,000

418,108

411,064

2013

Percentage ...
Visitor Receipts (in US$ Million)

12,000.0
10,774.6

CAGR = 29.6%
10,000.0
8,297.7
8,000.0
6,391.4

CAGR = 5.2%
6,000.0
4...
Strategic Directions
National Tourism Development Plan (NTDP) 2011 - 2016

1. Develop and market competitive tourist produ...
1. Develop and market competitive tourist products
and destinations
(NTDP 2011 – 2016 Strategic Directions)

Product Portf...
1. Develop and market competitive tourist products
and destinations
(NTDP 2011 – 2016 Strategic Directions)

PRODUCT – MAR...
2. Improve market access, connectivity and
destination infrastructure
(NTDP 2011 – 2016 Strategic Directions)

DOT-DPWH Ro...
Air Seat Entitlements and Utilization 2012
MARKETS
Korea
Japan
China
Taiwan
Australia
Singapore
Hong Kong
Canada
Malaysia
...
Volume of Flights, Passengers and Visitors per International Airport
January – June (2012 – 2013)

2012

International
Air...
Room Capacity 2012

Destinations
Northern PH

Available
Room

Number of
Establishments

New Major Accommodation Facilities...
Room Projection from 2013 to 2016
Destination
Clusters
Island
Grouping

Room Supply
(Available + Pipeline)
Available in
20...
3. Improve institutional governance and human
resources
(NTDP 2011 – 2016 Strategic Directions)

Programs
Regulatory Impac...
3. Improve institutional governance and human
resources
(NTDP 2011 – 2016 Strategic Directions)

Programs
Improve the Phil...
Highlights of Major Accomplishments (January - June 2013)

Develop and market competitive tourist products and destination...
Highlights of Major Accomplishments (January - June 2013)

Improve market access, connectivity and destination infrastruct...
Highlights of Major Accomplishments (January - June 2013)

Improve institutional governance and human resources

As of Jun...
Targets, 2013 - 2016

INDICATORS

2013

2014

2015

2016

International Tourists
Visitor Arrivals (Mn)

5.5

6.8

8.2

10....
Economic Impact Projection 2013 - 2016

INDICATORS

2013

2014

2015

2016

Gross Domestic Product
Total Visitor Receipts
...
109
Energy

Secretary Carlos Jericho L. Petilla
Department of Energy

110
Energy Reform Agenda (ERA)

“Energy Access for More”
A key priority of government to mainstream access of
the greater majo...
Power Sector Reform

Issued implementing rules and regulations for National Electrification Administration
(NEA) Reform Ac...
Luzon Supply-Demand Outlook 2013-2020

Megawatts

On Available Capacity:
Apr-May 2015:
Projected Deficit of
184MW
Mar-Jul ...
Megawatts

Visayas Supply-Demand Outlook 2013-2020

On Available Capacity:
Nov-Dec 2014:
Projected Deficit of 30
to 90MW
A...
Mindanao Supply-Demand Outlook 2013-2020

Megawatts

On Available Capacity:
2013: Projected Deficit
of 50 to 110MW
2014: P...
Megawatts

Mindanao Supply-Demand Outlook 2013-2020

On Available Capacity +
Committed:
Nov-Dec 2017:
Projected Deficit of...
Interventions on the Mindanao Supply Situation

Recommendations

Status

Operate Illigan Diesel Power Plant
(IDPP)

Curren...
Interventions on the Mindanao Supply Situation

Recommendations
Privatization of Power Barge 101-104
Balo-I Flood Control ...
Indigenous Fossil Fuel Development

Production
Unit
2011

Gas

Bn Cubic Feet

2012

H1 2013

140.4

137.77

No. of Contrac...
Enhanced Renewable Energy Development
Feed-in-Tariff (FIT) System Highlights
–

FIT Rules approved by ERC on 12 July 2010 ...
Promoted Energy Efficiency and Conservation (EE&C)

Actual Savings (in MMBFOE)
National EE&C Programs
2010

2011

2012

In...
Household Electrification Program (HEP)

HEP is an ongoing program providing electricity to households
Year
2010

Luzon

V...
Good Governance

Operationalized
www.kuryente.org.ph providing
public information on electricity
rates and generation capa...
2013 Onwards: Nurturing Sustainable Growth

Continuing Activities
– Household and Sitio Electrification
– Biofuels blendin...
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
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Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth

  1. 1. Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth September 2013 0
  2. 2. Table of Contents I. II. III. IV. V. VI. Macroeconomic Performance and Outlook........................................ Real Sector................................................................................... Monetary, External and Financial Sectors.................................... Fiscal Sector • Revenue Collection and Debt Management........................... • Expenditure Management....................................................... Sectoral Performance and Outlook.................................................... Trade, Industry and Investments.................................................. Agriculture and Fisheries.............................................................. Tourism......................................................................................... Infrastructure • Energy..................................................................................... • Road Transport and Flood Management................................ • Airports, Seaports and Mass Transport Systems.................... • Public-Private Partnership....................................................... Philippines Sovereign Credit Ratings: Journey to Investment Grade. Profiles of Speakers and Panel Discussants...................................... Directory of Economic Agencies......................................................... Investor Relations Office Brochure..................................................... 2 3 17 29 42 54 55 73 89 110 127 138 144 153 166 187 190 1
  3. 3. I. Macroeconomic Performance and Outlook 2
  4. 4. Real Sector Secretary Arsenio M. Balisacan National Economic and Development Authority 3
  5. 5. The Philippine Economy Sustained Robust Growth in H1 2013 2012 H1 2013 6.8% GDP Growth H1 2012 6.4% 7.6% Share to GDP Growth Rate Share to GDP Growth Rate Share to GDP Growth Rate Agri, Fishery, Forestry and Hunting 11.1 2.8 10.9 0.9 10.2 1.4 Industry 32.0 6.8 32.1 5.6 33.0 10.6 Of which: Manufacturing 22.1 5.4 22.1 5.1 22.6 9.9 Services 56.9 7.6 57.1 8.0 56.8 7.1 Household Final Consumption 70.4 6.6 69.1 6.7 67.7 5.3 Gov’t Final Consumption 10.3 12.2 11.5 13.2 12.3 15.3 Capital Formation 18.5 (3.2) 15.6 (15.7) 18.5 27.3 Of which: 20.3 10.4 19.8 5.6 20.8 12.7 1.8 29.8 1.9 50.2 2.4 36.2 Private Construction 6.4 11.5 5.6 (4.9) 6.2 17.4 Durable Equipment 10.0 8.0 10.2 6.2 10.2 7.9 (1.8) (333.8) (4.2) (1583.0) (2.3) 41.2 Exports 48.4 8.9 53.0 10.3 45.8 (7.0) Imports 47.6 5.3 49.0 3.3 45.2 (0.7) By Industrial Origin By Expenditure Fixed Capital of which: Public Construction Changes in Inventory Source: National Statistical Coordination Board 4
  6. 6. Sound Macroeconomic Fundamentals Supported this Remarkable Performance Favorable Interest Rate and Sound Banking System Low and Stable Inflation (%) 9.0 10.0 8.3 8.0 Headline Inflation Low-end Target High-end Target 7.0 6.5 6.0 8.0 15.7 8.2 3.0 3.2 2.9 CAR, RHS 4.4 2.0 2008 2009 2010 2011 2012 2013* 4.8 3.7 3.0 3.5 3.6 2.8 2.0 2007 20.0 16.0 Real interest rates, RHS 4.0 3.8 16.9 15.8 18.4 17.6 NPL Ratio, LHS 4.6 4.2 2006 15.5 5.7 4.0 2005 (%) 17.5 6.0 5.5 5.0 17.6 2.9 4.2 0.2 *Jan - Aug 2013 Note: High and low-end targets are based on the BSP publication on Inflation Targeting dated March 2013; Actual inflation figures are based on the 2006 CPI series. 2005 2006 2007 8.0 2.2 1.9 3.7 2008 2009 2010 4.0 3.5 2.1 0.0 12.0 0.0 2011 2012 Sustainable Fiscal and External Position 80.0 70.0 NG Debt to GDP (LHS) 68.5 60.0 50.0 -0.2 54.7 61.4 -0.9 54.8 53.9 -1.0 Fiscal Balance to GDP (RHS) -0.9 52.4 50.9 40.0 30.0 0.0 51.0 49.5 -0.5 60.0 -1.0 50.0 -1.5 40.0 -2.0 -2.0 -2.3 -2.6 20.0 -2.5 -3.0 -3.7 20.0 -3.5 -3.5 0.0 2005 2006 2007 * As of June 2013 2008 2009 2010 2011 2012 2013* 52.7 44.1 4.4 37.1 5.6 31.3 4.5 32.6 30.1 5.3 3.2 27.0 24.1 2.922.8 2.1 1.9 6.0 5.0 4.8 30.0 4.0 3.0 2.0 10.0 -4.0 10.0 External Debt to GDP, lhs Current Account to GDP, rhs (%) 1.0 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013* * As of Q1 2013 5
  7. 7. Our Competitiveness also Increased Global Competitiveness Index (GCI) Report Country 2013-2014 2012-2013 2011-2012 GCI Ranking GCI Ranking GCI Ranking Singapore 2 2 2 Malaysia 24 25 26 28 28 Thailand 37 38 39 Indonesia 38 50 46 Philippines 59 65 75 Vietnam 70 75 65 Cambodia 88 85 S&P's Upgraded to BBB-(May 2, 2013)/Stable 21 Brunei Moody's Upgraded to Ba1(July 25, 2013)/Rating under Review for Upgrade 97 Source: World Economic Forum Fitch Upgraded to BBB -(March 27, 2013)/ Stable 6
  8. 8. We are on Track with Respect to our Economic Targets; the Present Challenge is to Improve Social Outcome Targets Philippine Development Plan Targets by 2016 Poverty Incidence down to 7-8% 22% 6.8-7.2% 16.6% Gross Domestic Product Investment/GDP ratio Unemployment Rate (Millennium Development Goal: 2015) Where are we now? 6.8% (2012) 7.6% (HI 2013) Real GDP Growth 20.3% (2012) 20.8% (HI 2013) Fixed Capital as ratio to GDP 7.0% (2012) 7.3% (ave. of LFS’ 2013 Jan, Apr & Jul round) Unemployment rate 27.9% (H1 2012) 28.6% (H1 2009) Poverty Rate 7
  9. 9. Particularly Employment Generation Ave 2010 Ave 2012 Ave 2012 (Jan, Apr & Jul) Ave 2013 (Jan, Apr & Jul) Labor Force Level (‘000) 38,893 40,426 40,424 40,972 Employment Level (‘000) 36,035 37,600 37,577 37,978 54.5 57.2 57.1 58.6 2,859 2,826 2,847 2,994 7.4 7.0 7.0 7.3 Underemployment Level (‘000) 6,762 7,514 7,632 7,509 Underemployment Rate (%) 18.8 20.0 20.3 19.8 Indicator Wage and salary workers (% share to total employment) Unemployment Level (‘000) Unemployment Rate (%) Source: Labor Force Survey, National Statistics Office 8
  10. 10. And Poverty Reduction to Achieve Inclusive Growth First Semester Poverty Incidence Among Population Poverty Incidence Among Population by Region (%) 2011 (%) 35 14.3 30 28.8 28.6 27.9 12.8 25 20 16.6 8.9 64.0 15 2012 10 14.4 5 14.3 NCR, Reg III and IV 12.7 0 S1 2006 S1 2009 S1 2012 12.8 FY 2015 * Other Luzon Visayas 8.9 64.0 8.8 64.1 Mindanao *Philippine Development Plan Target Source: National Statistical Coordination Board 9
  11. 11. For the Midterm Assessment of PDP 2011-2016, We are Taking Stock of Lessons Learned in the past 3 years Good governance has proven to be an effective platform upon which 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 spatial and sectoral dimensions to ensure inclusivity Disasters can negate the gains and even push back development 10
  12. 12. Thus, Positive Actions with Sectoral and Spatial Dimensions will be Undertaken to Achieve Inclusive Growth Infrastructure development focusing on connectivity between regions/provinces, especially transport and power New growth drivers outside NCR (agri/agribusiness, tourism, IT/BPM in next wave cities, public housing, manufacturing, infra/logistics) Investment in human capital to improve the competitiveness/ productivity of current and future stock of the labor force Provision of social protection against income and employment shocks for the most vulnerable Improved resilience to natural disasters 11
  13. 13. We also Have our Priority Sectors to Support Inclusive Growth Philippine Development Plan 2011 - 2016 Midterm Assessment PDP Midterm Update Priority Sectors Agribusiness/Agriculture Manufacturing Housing Infrastructure/Logistics Tourism 12
  14. 14. Given these Concrete Strategies, We are Confident that Growth will Continue in 2013 and Beyond 2012 Actual H1 2013 Actual 2013 Target 2014 Target GDP Growth (%) 6.8 7.6 6.0-7.0 6.5-7.5 Agriculture Growth (%) 2.8 1.4 3.5-4.5 3.2-4.2 Industry Growth (%) 6.8 10.6 6.4-7.5 7.4-8.5 Services Growth (%) 7.6 7.1 6.3-7.3 6.7-7.6 Source: National Economic and Development Authority as approved by the Development Budget Coordinating Committee 13
  15. 15. Supported by the Following Growth Drivers Production Expenditures Strong performance of agri-based manufacturing, and recovery of semiconductor and electronics Robust public and private construction projects Buoyant domestic and local tourism Continued strong growth of wholesale and retail trade Real estate particularly housing as overseas Filipinos and BPOs continue to drive the property sector Greater productivity in agriculture and rebound of the fisheries subsector Higher public construction and investments in power generation Robust private investment in construction and durable equipment Strong household consumption due to better employment opportunities, strong remittance inflows, and low and stable inflation Increased tourist arrivals and more demand for business process management Improvement of external trade conditions 14
  16. 16. We also Remain Vigilant Against the Following Near-term Global and Domestic Risks to Growth… Weather disturbances (e.g., Typhoons, prolonged monsoon rains) Delays in the implementation of infrastructure development projects, particularly power Excessive capital inflows/outflows Uncertainty of economic recovery in the Euro area and Japan Tapering of monetary stimulus in the US Further economic slowdown in BRIC, particularly China Possible spike in commodity prices (e.g., petroleum) 15
  17. 17. …while Taking Advantage of Opportunities Improvement in the global economic environment – Sustained consumption growth in emerging markets Demographic transition – Rising middle-income class, continued growth of working-age population Increased economic integration of ASEAN member countries – Open flow of goods, services, labor, technology, finance More financial resources available – Fiscal space – Investment credit-rating expected to reduce borrowing costs 16
  18. 18. Monetary, External and Financial Sectors Governor Amando M. Tetangco, Jr. Bangko Sentral ng Pilipinas 17
  19. 19. Policy/Reform Milestones and Their Impact Policy Monetary Sector Maintained the BSP's key policy interest rates at 3.5 percent for the overnight borrowing or reverse repurchase (RRP) facility and 5.5 percent for the overnight lending or repurchase (RP) facility. Impact Price stability and non-inflationary growth Kept reserve requirement ratios steady. Rationalized the Special Deposit Account (SDA) facility by reducing SDA rates by a total of 150 basis points to 2.0 percent, imposed uniform rates across all tenors and fine tuned access of banks and trust department/entities to the SDA facility. External Sector Further liberalized existing foreign exchange (FX) regulations; new rules aim to further simplify FX transactions of the general public with banks. Adopted a number of macro prudential regulations, including guidelines on non-deliverable forwards (NDF) transactions involving the Philippine Peso. Financial Sector Strengthened the capacity of the banking system to endure shocks through the issuance of guidelines for the adoption of the Basel III capital adequacy standards for universal and commercial banks. Continued to take the lead in promoting financial inclusion with programs and reforms aimed at fostering greater access to financial services. Strong external position and stable foreign exchange rate Efficient, sound, competitive and inclusive financial sector Continued to champion financial learning and consumer protection. 18
  20. 20. Monetary Policy Settings Remain Supportive of Non-Inflationary Growth Prudent monetary policy has been effective in safeguarding price stability Previous rate cuts working their way through the economy Headline Inflation vs. Target (%) RRP Rate and Actual Lending Rate (%) 2002- Aug 2013 Jan 2009– Aug 2013 12 12 Headline 10 10 Lower bound of target Upper bound of target Aug’13: YTD= 2.9%2.1% 8 8 Jul 2013: 5.9% Jan-Aug ’13: 2.8% July ‘13 = 2.5% 6 6 4 4 2 Aug 2013: 3.5% RRP Rate 2 Average bank lending Rate 2009 2010 2011 2012 Jul Apr Jan Oct Jul Apr Jan Oct Jul Apr Jan Oct Jul Apr Jan Oct Jul Apr 0 Jan 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 0 2013 19
  21. 21. Robust External Position Despite Lingering Global Economic and Financial Uncertainties BOP Position and Current Account remain in surplus Balance of Payments, (US$ Million) 15000 Capital & Fin'l Account 13000 Current Account 11000 Balance of Payments 9000 External debt-to-GDP ratio declines significantly 7000 Current Account: 3.4 5000 External Debt (US$ Billion) and External Debt/GDP (%) 64 3000 1000 60.2 62 -1000 -3000 2004 2005 2006 2007 2008 2009 2010 2011 2012 70 External debt in US$ billion (lhs) 60 External debt as % of GDP (rhs) 60 Q1 Q1 2012 2013 59 58 50 40 Foreign exchange reserves continue to build up 56 Gross International Reserves, (US$ Billion) 90 83.2 80 24.1 22.8 14 30 12 70 GIR (lhs) Import Cover (rhs) 12.0 60 54 20 10 52 10 50 0 50 8 40 6 30 4 20 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 Q1 2012 2013 2 10 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 EndAug'13 20
  22. 22. Sound and Stable Banking System Bank capitalization remains above regulatory standards and international norms Quality of loan portfolio continues to improve Capital Adequacy Ratio Total Loans Portfolio (Php Million) and Non-performing Loans Ratio (%) (Philippine Banking System)* (Philippine Banking System) 4500 4,192 17.1 18 4000 16 3500 14 3000 12 2500 10 2000 1,822 19 2012: 18.4 18 17 16 2012: 17.3 8 1500 6 2.5 1000 4 500 0 14 2 0 15 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total Loans Portfolio (LHS) NOTE: • Starting January 2013, TLP and NPL of banks are computed as prescribed under BSP Circular No. 772. Gross NPL represents the actual level of NPL without any adjustment for loans treated as “loss” and fully provisioned. • Under the new computation, latest data available is for U/KBs only. NPL Ratio (RHS) May-12 May-13 TLP (Php Bn) 3,282 3,685 Gross NPL Ratio (%) 3.2 2.8 Net NPL Ratio (%) 0.5 0.4 13 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 CAR solo CAR consolidated * 2001-2011 data is on the Philippine Banking System; available data for 2012 is on U/KBs. 21
  23. 23. State of Financial Inclusion in the Philippines Expanding number of branches and ATMs from 2009 to March 2013, especially in MIMAROPA and selected regions in Mindanao Improving overall physical network of Philippine banks Regional Growth Rates (%) in the Number of Banking Offices and ATMs, 2009 – March 2013 Number of Banking Offices and ATMs 2001 – March 2013 14,000 140 12,000 120 10,000 100 Growth in the number of banks Growth in the number of ATMs Growth rate (%) 8,000 6,000 No. of banking offices 4,000 No. of ATMs 2,000 80 60 40 20 ARMM CAR Caraga SOCOSKSARGEN Davao Region Northern Mindanao Zamboanga Peninsula Eastern Visayas Central Visayas Western Visayas Bicol MIMAROPA CALABARZON Central Luzon -40 Cagayan Valley -20 Ilocos Region Mar'13 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 0 NCR 0 22
  24. 24. BSP’s Performance TARGET/ FORECAST ACTUAL 2012 2013 2013 3.2 percent 2.8 percent (Jan-Aug) 4 ± 1 percent 1. Prudent monetary policy Inflation 2. Robust external position Balance of Payments (BOP) US$9.2Bn (Jan-Dec 2012) US$3.7Bn (Jan-Jul 2013) US$4.4Bn Gross International Reserves (GIR) US$83.8Bn (End-Dec 2012) US$83.2Bn (End-Aug) US$87.0Bn External Debt-to-GDP ratio 24.1 percent (End-Dec 2012) (End-2011: 26.9 percent) 22.8 percent (Q1 2013) Decreasing Capital Adequacy Ratio (CAR), consolidated basis (U/KBs) 18.4 percent (End-2012) (End-2011: 17.7 percent) n.a. Increasing Non-Performing Loans (NPL) ratio (banking system) 2.5 percent (End-2012) (End-2011: 2.9 percent) n.a. Decreasing 3. Sound and stable financial system 23
  25. 25. Enhancing Corporate Governance Revised existing regulations on corporate governance in line with international best practices such as the “Principles for Enhancing Corporate Governance” issued by the Basel Committee on Banking Supervision Amended the guidelines strengthening BSP’s governance standards to rationalize the definition/qualifications of an independent director and the composition of the members of board-level committees Amended the regulations on the confirmation of the election/appointment of directors/officers of banks with a rank of senior vice president (SVP) and above to simplify the confirmation procedures Amended the Manual of Regulations for Banks (MORB) and the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) on the familial restrictions applicable to an independent director to align the said restrictions with the existing provisions of the Securities Regulation Code 24
  26. 26. Intensifying Efforts toward Financial Inclusion Policy, Regulation and Supervision Financial Education and Consumer Protection Data and Measurement Financial Inclusion Advocacy Section Title No. 1 in the world in microfinance regulatory environment (2009-2012) Implemented the enhanced rules on true and transparent lending practices Updated Anti-Money Laundering Rules and Regulations Widened range of products (i.e., micro-agri loans, housing microfinance loans, micro-deposits and microinsurance, etc.) Established Economic and Financial Learning Centers (EFLC) in 21 BSP regional branches Institutionalized the Financial Consumers Affairs Group (FCAG) to provide avenue for complaints resolution and redress. Worked toward a systematic collection of financial inclusion data for informed policy-making Mapped out financial service access points: – Banking offices went up by 25 percent to 9,442 as of March 2013 from 7,585 in 2001 – ATM network accelerated by 227 percent to 12,700 as of March 2013 from 3,882 in 2001 Sustained leadership in global financial inclusion initiatives Continued work on sharing knowledge and experience in financial inclusion with international peers Spearheaded the implementation of the Credit Surety Fund (CSF) – As of 7 August 2013, 27 CSFs in various provinces have been organized Ensured the smooth flow of remittances through the use of PhilPass REMIT System – Since its implementation in 2010 (up to June 2013), the PhilPaSS- REMIT System has processed 1,006,773 transactions with a corresponding value of Php39.18Bn 25
  27. 27. Macroeconomic Outlook for 2013 Actual Projections 2012 2013 2013 GDP Growth (%, 2000=100) 6.8 7.6 (H1) 6.0 – 7.0 a/ Headline Inflation (%, 2006=100) 3.2 2.8 (Jan-Aug) 3.0 – 5.0 a/ Exports Growth (%) Based on the BPM6 concept Based on NSO data 20.9 7.9 7.9 (Q1) -3.4 (Jan-Jul) 11.0 a/ Imports Growth (%) Based on the BPM6 concept Based on NSO data 11.3 2.7 -8.2 (Q1) -3.8 (Jan-Jun) 13.0 a/ OF Remittances 1/ Amount (US$ Bn) Growth Rate 21.4 6.3 10.7(Jan-Jun) 5.6 22.5b/ 5.0 b/ Current Account (US$ Bn) 7.1 3.4 (Q1) 7.0 b/ Balance of Payments (US$ Bn) 9.2 3.7 (Jan-Jul) 4.4b/ GIR (US$ Bn) 83.8 83.2 (end-Aug) 87.0 p/ a/ Based on projections adopted by the Development Budget Coordinating Committee (DBCC) on 3 July 2013 Based on BSP projections presented during the Monetary Board meeting on 16 May 2013 1/ Cash remittances coursed through banks p/ revised b/ 26
  28. 28. Key Risks to Inflation Downsize risks: Uncertainty over the strength of the global economy and its impact on international commodity prices Upside risks: Likelihood of higher electricity rates Continued strong liquidity growth 27
  29. 29. BSP Policy Directions Monetary sector Sustain an appropriate monetary policy stance consistent with the BSP’s primary mandate of promoting price stability conducive to sustained economic growth Continue to carefully scan the operating environment with a forward-looking perspective to move in a pre-emptive fashion to address risks to price stability External sector Maintain marketdetermined exchange rate Keep comfortable level of reserves Continue to promote external debt sustainability Financial sector Continue to undertake steps to strengthen the domestic financial system and help manage financial stability risks Sustain advocacies on microfinance, financial inclusion, consumer protection and economic and financial education 28
  30. 30. Revenue Collection and Debt Management Secretary Cesar V. Purisima Department of Finance 29
  31. 31. Revenues Grew Faster than Nominal GDP While nominal GDP grew 8.9% in 2012, total revenues and tax revenues rose faster at 12.9% and 13.2%, respectively 2011 In Php Bn 2012 Growth Rate Actual Program Actual (2012/2011) Total Revenues 1,359.9 1,560.6 1,534.9 12.9% Tax Revenues 1,202.1 1,427.4 1,361.1 13.2% BIR 924.1 1,066.1 1,057.9 14.5% BOC 265.1 347.1 289.9 9.3% 157.9 131.2 165.5 5.5% 75.2 61.8 84.1 11.8% Expenditure 1,557.7 1,839.7 1,777.8 14.1% Surplus / (Deficit) (197.8) (279.1) (242.8) 22.8% -2.0% -2.6% -2.3% Non-Tax Revenues BTr Income % of GDP Source: Bureau of the Treasury 30
  32. 32. Lower than Programmed Deficit for H1 2013 Revenues were boosted by the implementation of the Sin Tax Law In Php Bn 2012 Jan-Jun 2013 Jan-Jun Growth Rate Actual Program Actual (2013/2012) Total Revenues 760.9 861.0 839.5 10.3% Tax Revenues 671.5 791.4 746.3 11.1% BIR 521.2 620.3 593.7 13.9% BOC 143.4 163.9 145.1 1.2% 6.9 7.2 7.5 8.8% 89.4 69.7 93.1 4.2% Other Offices Non-Tax Revenues BTr Income 50.2 31.6 49.5 -1.4% Expenditure 795.4 945.7 890.8 12.0% Surplus/(Deficit) (34.4) (84.7) (51.3) 49.2% Source: Bureau of the Treasury 31
  33. 33. Improved Fiscal Position …through a combination of improved tax effort, reduction in interest cost and more efficient expenditure 2009 Actual 2012 Actual 2013 Adjusted 12.2% 12.9% 13.5% BIR effort 9.3% 10.0% 10.5% BOC effort 2.7% 2.7% 2.9% Others 0.1% 0.1% 0.1% Expenditure (% of GDP) 17.7% 16.8% 16.7% Deficit (% of GDP) -3.7% -2.3% -2.0% Interest payments (% of GDP) 3.5% 3.0% 2.8% Interest payments (% of Expenditure) 19.6% 17.6% 16.8% Tax effort (% of GDP) Source: Bureau of the Treasury 32
  34. 34. Impact of the Sin Tax Law Implementation Excise tax revenue collections from alcohol and tobacco increased by 46.1% in the first half of 2013 The significant increase in collections came even with an equally significant drop in the volume of cigarettes and alcohol produced in the market. Excise Tax Collections Based on Actual Payments Growth Rate Jan - Jun (In Php Bn) 2012 2013 (2013/2012) TOBACCO 14.6 22.4 53.1% ALCOHOL 11.8 16.2 37.3% TOTAL 26.4 38.5 46.1% *Numbers may not add up due to rounding off Sin tax law was implemented starting January 2013 Source: Department of Finance 33
  35. 35. Achieved Investment Grade from Major International Rating Agencies The improvement in the fiscal health of the economy is one of the reasons cited by major credit rating agencies in upgrading the Philippines’ sovereign credit rating to Investment Grade S&P Upgraded to BBB-/Stable from BB+ (May 2, 2013): INVESTMENT GRADE Fitch Upgraded to BBB-/Stable from BB+ (March 27, 2013): INVESTMENT GRADE Moody’s R&I JCRA Ba1/“Rating Under Review for Upgrade” (July 25, 2013) BBB-/Positive from BBB-/Stable (August 2, 2013): INVESTMENT GRADE Upgraded to BBB/Stable from BBB-/Positive (May 7, 2013): INVESTMENT GRADE 34
  36. 36. Tightening of Credit Default Swap (CDS) Levels Investor confidence in Philippine obligations is now ranked closer to Thailand than Indonesia Marked decline in average CDS spreads after upgrade: 127.9 94.5 Even as CDS began to track upwards after Bernanke’s May 22 Statement 300 Fitch Upgrade 275 S&P Upgrade 250 225 Bernanke Statement 200 175 Indonesia 150 125 Philippines 100 Thailand 75 50 8/6/2012 10/6/2012 12/6/2012 2/6/2013 4/6/2013 6/6/2013 Source: Bureau of the Treasury Credit Rating S&P Fitch Moody’s Philippines BBB- BBB- Ba1/RUR* Thailand BBB+ BBB+ Baa1 Indonesia BB+ BBB- Baa3 *Rating Under Review Source: S&P, Fitch, Moody’s 35
  37. 37. Impact of Investment Grade Rating on Private Sector Access to cheaper borrowings to finance expansion For the first 7 months of 2013, nine (9) local corporations already raised a total of: US$1.8Bn from offshore markets Php48.5Bn from domestic markets Benefits to certain corporations: Globe • 7-year peso bond for a 4.8875% coupon issued on July 17, 2013 (down from 6.000% issued on a 7-year bond in June 2012) Megaworld & SMC • 10-year dollar bonds for coupons lower than 5% (4.25% & 4.875%, respectively) issued in April 2013 36
  38. 38. 2013 Outlook Deficit to go down to 2.0% of GDP in line with the fiscal sustainability program 2012 2013 Growth Rate Actual Adjusted (2013/2012) Total Revenues 1,534.9 1,745.9 13.7% % of GDP 14.5% 14.7% Tax Revenues 1,361.1 1,607.9 % of GDP 12.9% 13.5% 1,057.9 1,253.7 18.5% 289.9 340.0 17.3% 13.3 14.2 6.8% 165.5 136.0 (17.8%) 84.1 57.7 (31.3%) 8.3 2.0 (76.0%) Expenditure 1,777.8 1,983.9 11.6% Surplus/(Deficit) (242.8) (238.0) (2.0%) % of GDP -2.3% -2.0% In Php Bn BIR BOC Other Offices Non-Tax Revenues BTr Income Privatization 18.1% Source: Department of Finance 37
  39. 39. 2014 Fiscal Program The new budget is in line with the medium-term fiscal deficit program of 2.0% of GDP in 2014 In Php Bn Total Revenues % of GDP Tax Revenues BIR BOC Other Offices Non-Tax Revenues BTr Income Privatization Expenditure % of GDP Surplus/(Deficit) % of GDP 2013 2014 Growth Rate Adjusted Proposed (2014/2013) 1,745.9 2,018.1 15.6% 14.7 15.1 1,607.9 1,879.9 16.9% 1,253.7 1,456.3 16.2% 340.0 408.1 20.0% 14.2 15.5 9.2% 136.0 136.1 0.1% 57.7 56.2 -2.6% 2.0 2.0 0.0% 1,983.9 2,284.3 15.1% 16.7 17.1 (238.0) (266.2) -2.0 -2.0 11.8% Source: Department of Finance 38
  40. 40. Prudent Liability Management Increasing reliance on domestic financing sources and improved debt sustainability NG Financing Program GG Debt/GDP …focused on increasing domestic source of funds ...lower than NG Debt/GDP ratio share (in %) 60 100% 80% % to GDP 44 16 34 11 52.4 35 50.9 51.5 50 60% 40% 20% 54.8 13 56 84 66 2011 44.3 43.5 87 65 2010 89 41.4 40 40.6 0% 2009 Foreign 2012 2013 2014 Emerging Program Domestic For 2014, we are planning a Php1.0Bn issuance offshore to reprice ROP credit after investment grade rating. Source: Bureau of the Treasury, Department of Finance 30 2009 2010 NG Debt 2011 2012 GG Debt The country ’ s improving debt profile is even more pronounced using the international debt indicator of general government (GG) debt/GDP ratio. Source: Bureau of the Treasury, Department of Finance 39
  41. 41. Consolidated Public Sector Deficit …to remain low at 0.8% of GDP in 2014 due to lower NG deficit and improved GFI and LGU performance 100.0 (241.4) (355.8) (175.1) (163.3) (158.3) Php Billion -100.0 (83.5) -0.7 -1.5 -200.0 (100.8) -0.8 0.0 -1.0 -1.3 -2.0 -1.8 -300.0 % of GDP 0.0 1.0 -3.0 -3.1 -400.0 -4.0 -4.0 -500.0 -5.0 2009 2010 2011 2012 2013 BESF 2013 Revised 2014 BESF GFI – Government Financial Institution LGU – Local Government Unit Source: Department of Finance 40
  42. 42. Revenue Enhancement Measures Focus to ensure that positive momentum in government fiscal finances continue Full implementation of RA 10351 (Sin Tax Law) Measures in Place Existence of Fiscal Intelligence Unit Heightened collections from: Self-employed Estate Taxes Other Initiatives DOF Legislative Agenda Anti-smuggling strategies: Port accreditation Import Mapping Audit of oil companies Trade statistics reconciliation Rolling import plan BIR BOC Fiscal Incentive Rationalization Tax Incentive Management and Transparency Act (TIMTA) Customs Modernization Act Valuation Reform Act Fiscal Regime for Mining Industry 41
  43. 43. Expenditure Management Secretary Florencio B. Abad Department of Budget and Management 42
  44. 44. Assessment of the Latest Economic Performance Resurgence in public spending has contributed to the growth of our domestic economy GFCE Growth, Public Construction Growth and GDP Growth (in %) 36.2 40.0% 29.8 30.0% 20.0% 10.0% 12.2 10.0% 8.0% 15.3 6.0% 4.0% 2.1 2.0% 0.0% 0.0% -10.0% -2.0% -20.0% -4.0% -30.0% -40.0% -6.0% -39.5 GFCE Public Construction GDP -50.0% -8.0% -10.0% 2011 2012 2013 S1 *GFCE – Government’s Final Consumption Expenditure 43
  45. 45. NG Disbursement Performance, January to June 2013 PARTICULARS Levels (Php Bn) H1 2012 H1 2013 Actual Actual 2012 vs. 2013 Increase/(Decrease) Amount Percent As % of Full-Year Program REVENUES 760.9 839.5 78.5 10.3 48.1 DISBURSEMENTS 795.3 890.8 95.4 12.0 44.9 CURRENT OPERATING EXPENDITURES 659.5 730.5 70.9 10.8 46.0 Personnel Services Maintenance and Other Operating Exp. Subsidy Allotment to LGUs Interest Payments Tax Expenditures 255.3 114.9 12.8 109.3 150.0 17.3 282.9 145.0 11.1 120.9 157.1 13.5 27.6 30.1 (1.7) 11.6 7.1 (3.8) 10.8 26.2 (13.2) 10.6 4.8 (22.0) 45.3 45.6 24.6 50.0 47.3 50.0 124.1 163.7 39.6 31.9 43.0 88.3 0.9 35.0 125.5 0.3 37.9 37.2 (0.6) 2.9 42.2 (63.1) 8.4 41.4 25.3 49.7 (3.4) (15.1) (129.6) (51.3) (16.9) CAPITAL OUTLAYS Infrastructure/Other Capital Outlays Equity Capital Transfers to LGUs NET LENDING 11.6 SURPLUS/DEFICIT (34.4) 49.2 (23.7) 21.5 *Numbers may not add up due to rounding 44
  46. 46. NG Fiscal Outlook, FY 2013 Stronger bias towards more productive expenditures (MOOE and CO) Particulars Levels (Php Bn) 2012 2013 Actual Adjusted Percent of GDP 2012 2013 Actual Adjusted Growth Rate REVENUES 1,534.9 1,745.9 14.5 14.7 13.7 DISBURSEMENTS 1,777.8 1,983.9 16.8 16.7 11.6 1,411.0 542.6 256.7 42.1 218.6 312.8 38.1 1,588.4 624.4 317.9 45.0 241.8 332.2 26.9 13.4 5.1 2.4 0.4 2.1 3.0 0.4 13.3 5.2 2.7 0.4 2.0 2.8 0.2 12.6 15.1 23.8 6.8 10.6 6.2 (29.4) 339.3 250.8 21.3 67.2 381.0 303.4 1.3 76.3 3.2 2.4 0.2 0.6 3.2 2.6 0.0 0.6 12.3 21.0 (93.8) 13.5 27.4 14.5 0.3 0.1 (47.1) (242.8) (238.0) (2.3) (2.0) (2.0) CURRENT OPERATING EXPENDITURES PS MOOE Subsidy Allotment to LGUs Interest Payments Tax Expenditures CAPITAL OUTLAYS Infra & Other CO Equity Capital Transfers to LGUs NET LENDING SURPLUS/(DEFICIT) *Numbers may not add up due to rounding 45
  47. 47. Major Government Spending Initiatives Ramped-up investments for public infrastructures Levels (Php Mn) Particulars Roads and Bridges Basic Educational Facilities* Flood Control/Seawalls Housing National Irrigation Farm-to-Market Roads Health Facilities Enhancement Program Electrification Airports/Air Navigational Facilities Other Public Works Water Supply Preliminary and Detailed Engineering Land Transportation/Railways Ports and Lighthouses Quick Response Fund Others Total Infrastructure Outlays 2012 Actual 2013 GAA 2014 Proposed 84,218 11,012 11,331 10,518 24,193 4,868 5,078 4,941 802 15,120 1,583 780 116 679 1,383 39,113 108,097 26,268 16,536 23,203 22,212 5,657 13,558 6,374 5,195 1,321 3,335 1,724 6,661 2,373 1,150 51,043 144,443 45,626 34,069 16,317 16,172 12,603 9,037 9,679 9,014 5,092 4,503 3,026 1,642 1,377 1,305 85,529 215,735 294,708 399,432 Growth Rate (% ) 2012-2013 28.4 138.5 45.9 120.6 (8.2) 16.2 167.0 29.0 547.8 (91.3) 110.7 121.0 5,633.5 249.6 (16.8) 30.5 36.6 2013-2014 33.6 73.7 106.0 (29.7) (27.2) 122.8 (33.3) 51.8 73.5 285.4 35.0 75.5 (75.3) (42.0) 13.5 67.6 35.5 Source: Department of Budget and Management * Inclusive of School Building Program 46
  48. 48. Major Government Spending Initiatives Key investments for poverty reduction and equitable access to basic social services Conditional Cash Transfer Program K-12 Program Universal Health Care Program Expansion of household beneficiaries in 2013 from 3.1Mn to 3.8Mn Further expansion to cover 4.4Mn households in 2014 to include street families and indigenous peoples Passed into law on May 15, 2013 Increase DepED Budget from Php238.8Bn in 2012 to Php293.4Bn in 2013 to cover the construction /rehabilitation of classrooms (21,488) and teachers (61,510) Sin Tax Law passed to provide Php23.97Bn in 2013 and Php29.78Bn in 2014 Ongoing formulation of IRR by DOH, DOF and DBM Tertiary Education CHED implemented the Students’ Grants-in-Aid Program for Poverty Alleviation (SGP-PA) to increase the number of higher education graduates from poor households For academic year 2012-2013, 4,041 students have benefited under the SGP-PA Prioritize approval of course/program offerings driven by the requirements of the market such as the BPOs and Tourism Industry Technical Vocational Education The Php1.4Bn proposed budget for the Training for Work Scholarship Program for 2014 is twice the Php700Mn provided in 2013. The proposed budget is intended to subsidize 163,300 enrollees 47
  49. 49. Budget by Sector, FY 2003-2014 Continued significant increase in resources committed to Social and Economic Services along with a significant decline in Debt Service Percent Share of Total Budget 48
  50. 50. Expenditure Management Reforms Significant expenditure management reforms have been initiated to implement the government’s commitment towards a strong and healthy fiscal position over the medium-term Faster Budget Execution 2010: Disaggregation of Lump Sum Funds 2011: Procurement Innovations (Early Procurement & Expansion of Philippine Government Electronic Procurement System (PhilGEPS) 2012: Account Management Teams 2013: One-Year Validity of Appropriations 2014: The Budget as Release Document Tighter Alignment with Priorities 2010: Zero-Based Budgeting & Evaluation of Major Programs 2011: Alignment of Budget with 5 Social Contract KRAs 2012: Program Budgeting Approach & Groups of Agencies Working on Common Objectives 2013: Budget Prioritization Framework Performance Budgeting Transparency and Participation in the Budget Process 2011: Review of OPIF to Refine Outputs, Performance Indicators and Budget 2011: Started Results-Based Performance Management System 2012: Performance-Based Incentive System and Grant of Bonuses according to Contribution to Organizational Targets 2013: Performance-Informed Budgeting 2010: Government-CSO Principles of Constructive Engagement 2011: Mandatory Disclosure Provisions (2012: Transparency Seal) 2011: National Government Agencies-Civil Service Organization (NGA-CSO) Budget Partnerships 2011: Use of Technology for Transparency (PDAF webpage, BudgetNgBayan.Com, etc.) 2012: Bottom-Up Budgeting 49
  51. 51. Moving Towards Performance-Informed Budgeting With the Performance Informed Budget or PIB, each peso is presented alongside the outcomes and outputs that we spend for Outcomes Program Priorities Department Outputs Performance Indicators Inputs (PAPs)* Enabled by Organizational Performance Indicator Framework (OPIF) Consistent with Results-Based Performance Management System Empowers Performance Delivery via Office of the Cabinet Secretary *PAPs – Programs, Activities, Projects 50
  52. 52. Inclusive Development and Employment Generation The government, through the budget, seeks to promote a new business model Promoting a New Business Model Government Support to Enterprise Development for 2014 Driven by Communities and Small Entrepreneurs Promotion and Development of Small and Medium Industries – Php750Mn Enabled by Micro Finance and NGOs Shared Service Facilities – Php770Mn Businesses Enlightened by Shared Value Coconut Industry Development such as the Smallholder Oil Palm Plantation Development Project and Agro-Industrial Hubs Project – Php2.0Bn Supply of Services, Infrastructure Facilities and Equipment for Fishery Industry –Php2.3Bn 51
  53. 53. Medium-Term Fiscal Program, FY 2012-2016 Infrastructure spending to grow from 2.5% of GDP in 2013 to 5.0% in 2016 Particulars Levels (PHP Bn) REVENUES 2012 Actual 2013 Adjusted 2014 Proposed 2015 Projection 1/ 2016 Projection 1/ 1,534.9 2,814.0 16.1 18.4 16.9 17.8 1,983.9 2,284.3 2,685.4 3,146.1 16.7 11.6 17.1 15.1 18.1 17.6 18.9 17.2 1,393.0 1,558.5 1,736.5 1,895.6 2,060.1 312.8 332.2 352.7 383.6 421.1 357.3 Current Operating Expenditures 2,388.4 15.1 15.6 16.8 14.1 % of GDP Growth Rate 2,018.1 14.7 13.7 1,777.8 DISBURSEMENTS 1,745.9 14.5 12.9 % of GDP Growth Rate 410.9 522.9 766.5 1,062.7 237.3 299.4 418.2 601.5 834.5 2.2 23.4 2.5 26.1 3.1 39.7 4.0 43.8 5.0 38.7 27.4 14.5 25.0 23.3 23.3 Of which: Interest Payments Capital Outlays Of which: Infrastructure Outlays % of GDP Growth Rate Net Lending DEFICIT % of GDP 2/ (242.8) (238.0) (266.2) (297.0) (332.1) (2.3) (2.0) (2.0) (2.0) (2.0) 1/ Subject to revision based on changes in macroeconomic assumptions and other factors 2/ Includes NG Infrastructure Outlays, GOCCs Infra Subsidy and LGU Infra T ransfer. T he LGU Infra Transfer estimates w ere computed by using the average increase of LGU Land and Land Improvements, Buildings, Public Infrastructure and Construct ion in Progress Source: Department of Finance, Department of Budget and Management, National Economic and Development Authority 52
  54. 54. Aquino’s Legacy: Ensuring the Irreversibility of Reforms By the time its term ends in 2016, the Aquino Administration seeks to leave behind a legacy of sustained good governance. Here are the strategies being employed to ensure the irreversibility of reforms: Institutionalization Reform Constituency Concrete Dividends Deeply embed reforms in the policies, systems and processes of government (including legislation and leveraging technology) Build a strong constituency – CSOs, communities, private sector, etc. – to provide constant support and demand for reforms Ensure that reforms lead to concrete benefits to people, so that the reversal of beneficial reforms will be politically and economically costly 53
  55. 55. II. Sectoral Performance and Outlook 54
  56. 56. Trade, Industry and Investments Secretary Gregory L. Domingo Department of Trade and Industry 55
  57. 57. Improved Business Environment Attracted More Investments BOI – PEZA Approved Investments (Php Bn) Jan-Jun Agency 2011 2012 BOI 368.93 PEZA TOTAL 2012 2013 % Growth 360.35 165.51 201.90 22.0 288.34 311.95 43.61 83.69 91.9 657.27 672.30 209.13 285.59 36.6 Total BOI-PEZA approved investments increased by 36.6% in H1 2013 70,936 jobs to be generated 79.0% or Php159.5Bn of BOI-registered investments (Php201.9Bn) is in the energy sector to help build the country’s capability to supply the much needed power requirements of domestic enterprises 44.6% or Php37.3Bn of PEZA’s Php83.7Bn approvals is in the real estate sector, followed by accommodation and food service (26.3% or Php22.0Bn), and manufacturing (19.8% or Php16.6Bn). Big ticket projects: MCE Leisure (Philipines) Corporation; Petron Corporation; Bac-man Geothermal, Inc.; Robinsons Land Corporation; Megaworld Corporation; SM Prime Holdings, Inc.; Boracay Seascapes Resort, Inc.; Travellers International Hotel Group, Inc.; Hedcor Sabangan, Inc.; Cebu Air, Inc. Source: Board of Investments 56
  58. 58. Improved Business Environment Attracted More Investments Robust Performance in H1 2013 BOI-PEZA Approved Investments by Industry BOI-PEZA Approved Investments by Source Share in % Value in Php billion Administrative Support Service Activities, 2.2% Others, 3.6% 50.0 45.0 Manufacturing, 7.0% 43.6 40.0 35.0 Accommodation & Food Service Activities, 9.2% 30.0 25.0 Electricity, Gas, Steam & Air Conditioning Supply, 55.9% Real Estate Activities, 22.2% 20.6 20.0 15.0 10.0 9.3 7.1 6.0 5.0 2.2 1.5 1.5 0.0 Source: Board of Investments Source: Board of Investments 57
  59. 59. Continued Increase in Foreign Investments into the PH Continued Increase in Foreign Investment Inflows into the PH based on BOI-PEZA Approved Projects from 2011-2013 (SH) An Upward Trend in the Number of Registered Regional Operating Headquarters (ROHQ)/Regional Headquarters (RHQ) BOI-PEZA Approved Investments No. of Registered ROHQs/RHQs and its Growth (%) Year Value (Php Bn) Amount of Approved Foreign Investments % Share of Foreign Investments % Growth in Foreign Investments 218.91 2012 672.30 282.45 42.01% H1 2012 209.13 38.49 285.59 91.91 32.18% % Growth 25 25% 37 48% 18.40% H1 2013 2011 33.31% 20 2012 657.27 Number of Registered ROHQs/RHQs 2010 2011 Year 29.03% 138.79% Notable Foreign Investments in 2012 and 2013 Del Monte Corporation's (USA) US$60Mn in Maguindanao for its 3,000-hectare banana plantation that will employ 4,500 workers Holcim's (Switzerland) additional investment of US$400-US$450Mn for a new cement plant Fomento Económico Mexicano Sociedad Anónima's (FEMSA) (Mexico) acquisition of Coca Cola Bottling Corporation Philippines in the amount of US$688.5Mn representing 51% of the company's total value of US$1.35Bn Itochu's (Japan) buy-out of Dole Food Company in the amount of US$1.685Bn Source: Board of Investments 58
  60. 60. Sustained Investor Confidence Strong Investor Confidence on Domestic Business Climate BOI-PEZA facilitated the inbound missions of 567 companies/organizations (225 individual company/ agency visits; 198 multi-company/delegations, representing 342 companies/organizations), accounting for 78% of total IPA-facilitated investment missions of 731 (preliminary data) for H1 2013. BOI-Facilitated Investment Inbound Missions Realized Projects – From the inbound visits, 6 projects amounting to US$87.2Mn have already been realized estimated to create 1,500 jobs. Three (3) projects are positive leads. Main Sectors of Interest of Firms – Main Sectors: information technology and business process management (IT–BPM), manufacturing, energy, construction, automotive, mining – Other Sectors: garments, electronics, tourism, oil and gas, shipbuilding and aerospace Countries of Origin – Interest coming from European countries and sustained interest from the USA, topped the country of origins of the visits in PH in H1 2013, followed by Japan, India, Australia, and Malaysia. Stronger Inflow of Inbound Delegation and Company Visits Proactive support of our Philippine Embassies and Foreign Trade Posts The continued positive perception and sustained business confidence of the global business community on the present administration and the economy The prevailing economic crisis in US & Europe which paved the way for investors to look at other regions, particularly Asia as the next hot destination for business opportunities. 59
  61. 61. Merchandise Exports Gradually Recovering Philippine Export Performance (January to June 2013) PH’s merchandise exports heading towards a gradual recovery – PH merchandise exports amounted to US$25.59Bn in the first semester of 2013. – A gradual recovery can be gleaned from the reduced level of contraction at 4.5% in the year-to-date (YTD) exports, aided substantially by the 15.6% month-on-month (MOM) growth of electronics exports in June 2013. Top Exports – Electronics remained PH’s top export at US$10.1Bn and comprised 39.42% of total PH exports. – Non-electronic exports contributed 55.3% of PH’s total merchandise exports, posting US$15.5Bn and growth of 7.6%. H1 2013 Exports In US$ billion 6.0 4.9 5.0 4.0 4.0 3.0 2.5 4.3 3.7 4.0 3.2 2.6 2.5 2.4 2.3 2.0 1.0 1.5 1.5 1.8 Feb Mar 1.6 Top Export Markets H1 2013 In US$ billion 4.5 1.7 2.0 0.0 Jan Total Exports Apr Electronics May Jun Non-Electronics Top Markets – Japan remained the PH’s top export market, with exports up by 8.8%. – Other export markets that also posted positive growth for the first half of the year were Malaysia (44.5%) and Korea (34.5%). Source: Board of Investments 60
  62. 62. Export Outlook for 2013 Export Targets: 2013 -2016* ACTUAL** 2011 Value (in US$ Bn) TARGETS 2012 Growth Value (in US$ Bn) 2013 Growth Value (in US$ Bn) 2014 Growth Value (in US$ Bn) 2015 Growth Value (in US$ Bn) 2016 Growth Value (in US$ Bn) Growth Total Merchandise 48.3 -6.2 52.1 7.9 60 15 69 15 79 15 91 15 Total Services 17.9 26.7 18.6 4.2 21 15 23 10 26 10 29 10 TOTAL EXPORTS 66.2 0.9 70.7 6.9 81 15 92 14 105 14 120 14 *Adjusted as of 18 July 2013. Growth targets as approved by Export Development Council in September 2012 are unchanged; details may not add up to totals due to rounding off. ** Actual export data as adjusted by the National Statistics Office and Bangko Sentral ng Pilipinas Current Bright Spots in Exports Agricultural Crops (e.g., banana, pineapple, mango), which are exported either as fresh or processed into foods and beverages, are doing well internationally (more than 30% growth in January-May 2013). Seaweed Products are gaining more foothold in China, despite competition from Indonesia, as seaweed derivatives now have wider application in manufacturing industries like supplements, binding, stabilizers, and coagulants. Coconuts are no longer limited to being used for conventional products as new products have evolved and are bestselling in the US, Europe and Asia, such as: coconut flour, milk substitutes, virgin coconut oil (VCO), coco water drinks and coco water concentrates, and coconut oils. Wood-Based Products (e.g., creative basketwork, wickerwork and natural fibers) continue to be noticed internationally given the wider market access for vegetable plaiting materials and accents. 61
  63. 63. Export Outlook for 2013 Industry leaders maintain a positive outlook for the rest of the year with year-end export growth projections up to 11%. Foreseen recovery in volume for electronics, pricing in mineral products, substantive digit growth in machinery and transport equipment exports, and sustained double-digit positive performance of agro-based products are the primary factors. The final tale-of-the-tape will depend also on anticipated economic recovery in advanced economies and the continued growth of emerging market economies. Reuters’ recent poll of 250 economic analysts showed that U.S. recovery will pick up some momentum in the second half of the year, just as the euro zone economy steadies itself after more than a year in recession. After a year and a half of recession, Europe’s battered economy could finally be showing signs of life later this year, e.g., the German index of business confidence rose for the third month in a row while surveys of purchasing managers in the euro area indicate manufacturing activity edged back into growth territory in July for the first time in 18 months. As far as electronics is concerned, our local companies and PEZA locators need to continue to shift products from being intermediate inputs into more assembled international consumer brands and strengthen domestic brands in smartphones and tablets. Progress in achieving the free movement of goods aspect of the ASEAN Economic Community (AEC) 2015 has been largely achieved. Attention is now focused on non-tariff barriers and trade facilitation measures. At the same time, we continue to maximize trade opportunities offered by our ASEAN dialogue partners. Improved productivity is essential for the Philippines to compete with low-cost neighbouring economies, and additional steps are needed to promote more competition, improve human capital, eliminate limitations on foreign investment, reduce incentives, and reform state-owned institutions. With the Government's public-private partnerships underway, new investments in major infrastructure projects to lessen costs on inter-island transportation are encouraged. 62
  64. 64. Policy Interventions to Support Exports Creation of the Networking Committee (NC) on ASEAN Economic Community (AEC) 2015 – The Export Development Council (EDC) created the NC on AEC 2015 that aims to prepare exporters to take full advantage of the opportunities offered by AEC while addressing the competitive challenges of integrating into the regional and global economies. Pushing for the Amendment of the Cabotage Law – – EDC, for the past three Congresses now, has been working for the amendment of the Cabotage Law, identified as one of the root causes of high shipping cost, a barrier to domestic and foreign trade, especially for Philippine micro, small and medium exporters. President Aquino, in his 2013 State of the Nation Address, pronounced his support to the amendment of certain sections of the Tariff and Customs Code of the Philippines and the Domestic Shipping Development Act of 2004 as filed by Cagayan de Oro Representative Rufus Rodriguez through House Bill 1789. Continue Streamlining Processes for Permits, including Reducing Fees of Key Regulatory Agencies such as Food and Drug Administration (FDA) – The increase in fees in FDA, ranging from 900% to 4,000%, heavily burdens the already struggling food, cosmetics and drug industries, based on EDC’s analysis. This renders PH products uncompetitive not only in the world market, but also on the domestic front, especially in the face of the coming ASEAN Economic Integration in 2015. It is also seen to negatively affect the Philippines’ competitiveness ranking due to the high cost and longer time in the processing of permits and licenses. EDC recommends the conduct of a public hearing where all stakeholders, especially SMEs, will be able to air their side and for FDA to explicate the increase in fees and respond to other issues that need to be addressed. Harmonize the guidelines on the Gross Vehicle Weight (GVW) and the axle existing load policy. – EDC-NC on Transport and Logistics sees the adverse effect of implementing the policy primarily on the increase in cost and delay/inefficiency in the delivery of export goods. Opening and Expanding market Access for Philippine exports – Engage actively in the negotiations for SEAN Regional Economic Partnership (RCEP) – Negotiate FTA with the European Union – Prepare to negotiate entry into the Trans-Pacific partnership Agreement (TPP) Apply for European Union Generalized Scheme of Preferences (GSP+) Program for Preferential Tariff Actively advocate for renewal of United States Generalized Scheme of Preferences (GSP) 63
  65. 65. More Aggressive Export Promotion Doing Business in Free Trade Areas (DBFTA) Regional Interactive Platform for Philippine Exporters (RIPPLES) 60 DBFTA sessions were conducted and attended by 6,522 participants representing 3,134 companies. These sessions, which focused on exporting to FTA partners of the Philippines, were held in the National Capital Region (NCR), Region I, III, IV-A, VI, X and ARMM. From January to July 2013, 33 sessions/activities on Food, Gifts/Décor/Houseware, and Information Technology-Business Process Management (IT-BPM) were conducted. Through the Philippine Trade Trading Center (PTTC), private sector experts in food technology and sanitation, creative design, IT certification, web design and merchandising, have been tapped for sessions, interventions and clinics The overseas missions in the Middle East in March 2013 have generated about US$45.4Mn in sales, which were largely on fresh and manufactured food exports. The Guangzhou Shenghao Import-Export Company (with US$3.0Bn global business as of 2012) recently visited the Philippines, looking for suppliers of metal ores and scraps, notably copper, nickel and iron. It has expressed interest to purchase or enter into venture agreements with five (5) major Philippine mineral production companies (e.g., Atlas Mining Development Corporation, First Stronghouse Mining Corporation, Apex Mining Company, TVI Resource Development, and, Ore Asia Mining and Development Corporation). Successful Trade Missions Japan’s importation of foodstuff from the Philippines is expected to increase with the participation of 22 PH companies in the 38th International Food and Beverage Exhibition (FOODEX) on 5-8 March 2013 in Tokyo. Exportation of consumer non-durable products to Japan is also expected to pick up as a result of continuing negotiations derived from the 6-8 February 2013 participation of the Philippines at the Tokyo International Gift Show. Ten Philippine company participants projected actual on-site purchases amounting to US$145,000. Buyers from Japan also attended the March 2013 Manila FAME. In July 2013, 182 members of the Korea Importers Association – the only private organization exclusively dedicated to facilitating imports into Korea – went to the Philippines; and out of them, 103 Korean businessmen representing 81 companies met with 189 Filipino businessmen for business matching sessions on industrial products, food, and services. 64
  66. 66. Policy Thrusts for 2013 and 2014 Industry Development Program To help ensure sustainable economic growth, the government partnered with industry and academe to formulate and implement Industry roadmaps. Revive the Industry Development Council (IDC) Implement the Manufacturing Revival Program for 2014-2016 To address the horizontal issues of the different industries, the DTI has secured the commitment and cooperation of the lead agencies (i.e., DPWH for infrastructure; DOE for power and energy; DOST for research and development; DepEd, CHED, DOLE and TESDA for human resource development; DILG and NCC for local government regulations; and DTI as lead for international marketing and promotions and the amendment of cabotage-related laws & regulations) Investment Priorities Plan (IPP) 2013 IPP – Emphasis put on job generating sectors of the economy – Priority areas: Agriculture/Agribusiness and Fishery, Creative Industries/Knowledge-based services, Shipbuilding, Mass Housing, Iron and Steel, Energy, Infrastructure, Research and Development, Green Projects, Motor Vehicles, Strategic Projects, Hospital, Medical Services, Disaster Prevention, Mitigation and Recovery Projects 2014 IPP – Strategies and action plans identified in industry roadmaps will form part of the agency’s policy thrusts, plans, and programs. – Specific priority areas composed of investment gaps identified in the roadmaps. 65
  67. 67. Enabling Business Environment for Global Competitiveness Philippine Business Registry (PBR) and Business Name Registration System (BNRS) Business Permits and Licensing Systems (BPLS) National Economic Research and Business Assistance Center (NERBAC) The BNRS and PBR successfully migrated to the cloud environment on 17 January and 4 February 2013, respectively, to address the numerous problems arising from hardware issues, thus delivering better service. Reduced average registration processing time of DTI, BIR (TIN-validation),SSS, PhilHealth, and Pag-IBIG to 45 minutes from 4 to 5 days. 12,090 registration for PBR for the period January-April 2013 On enhanced BNRS, average processing time for business name transaction was further reduced to 10 from 15 minutes. Business name registration used to take 4-8 hours. 177,488 registration for BNRS for H1 2013 A joint project of DTI and DILG to simplify permits and licensing systems in all cities and municipalities, reducing the following: – Steps to 5 or less – Processing time to 10 days (new applications) and 5 days (renewals) – Number of signatories to 5 or less As of 31 March 2013, 926 LGUs have undergone process reengineering. (Source: LGA, DILG) As a one-stop business center that provides assistance to start-up enterprises in: – business registration and licensing; – knowledge management; and – investment promotion and facilitation. Established 15 regional centers and 78 provincial centers nationwide. 66
  68. 68. Enabling Business Environment for Global Competitiveness Accreditation of Conformity Assessment Bodies. Accreditation is the independent evaluation of conformity assessment bodies against recognized standards. In H1 2013, the Philippine Accreditation Office (PAO) accredited the following: Conformance to International Standards – 6 Certification Bodies accredited to ISO 17021 – 1 Certification Body accredited to ISO Guide 65 – 208 laboratories (182 testing; 26 calibration) accredited to ISO/IEC 17025 – 5 Medical Laboratories accredited to ISO 15189 – 2 Inspection Bodies accredited to ISO 17020 67
  69. 69. Achieving Inclusive Growth through MSME Development Big Push for MSMEs Provides access to market and finance, programs for productivity and efficiency, creates conducive business enabling environment, and builds alliance with relevant agencies and institutions in developing competitive and innovative MSMEs. Implementation of MSME projects: – National Industry Cluster Capacity Enhancement Project (NICCEP) – Shared Service Facilities (SSF) Project – SME Roving Academy – Other SME projects (e.g., Rural Micro Enterprise Promotion Programme (RuMEPP), Access of Small Entrepreneurs to Sound Lending Opportunities (ASENSO), Tindahang Pinoy). MSME Sector Targets and Accomplishments for 2013 Targets Accomplished (Jan-Jun) % a. MSMEs assisted 67,547 35,330 52.3 b. Jobs generated 259,189 141,272 54.5 c. Domestic sales Php12,087.41Mn Php5,791.73Mn 47.9 Source: Department of Trade and Industry-Regional Operations and Development Group 68
  70. 70. Achieving Inclusive Growth through MSME Development Nationwide Industry Cluster Capacity Enhancement Program (NICCE) NICCEP aims to enhance the capacity of selected industry clusters throughout the country to plan, implement, facilitate service delivery, evaluate projects, and improve industry competitiveness and business environment. Priority Industry Clusters Abaca Bamboo Wood Banana Cacao Mango Coconut/coco coir Coffee Dairy Fine jewelry Rubber Gifts, decors, housewares Calamansi ICT Meat (fresh and processed) Poultry Metals and metal works Mining Milkfish Muscovado Organic fertilizer Pangasius Pineapple Processed food Renewable energy Palm oil Seaweed Veggie noodles Wearables and homestyles Performance of Pilot Industry Clusters 2012 - H1 2013 Investments Domestic Sales Exports Sales Jobs created MSMEs Created MSMEs Assisted Trainings Conducted Beneficiaries Trained TOTAL (2012 – H1 2013) Php9,375.38Mn Php18,193.05Mn US$7,681.06Mn 152,796 2,283 7,658 561 17,021 Source: Department of Trade and Industry-Regional Operations and Development Group 69
  71. 71. Achieving Inclusive Growth through MSME Development Shared Service Facilities (SSFs) SME Roving Academy The Shared Service Facilities, a Public-Private Partnership project to assist community-based MSMEs nationwide through the provision of lacking machineries and equipment for common use to increase their productivity and efficiency. The SME Roving Academy (formerly known as SME Caravans) is a nationwide continuous learning program for the development of MSMEs to help them become more competitive in the domestic and international markets. The type of equipment include packaging machines, retort, kiln driers, dye vats, slicers, thickness planner and handlooms, among others. Php700Mn worth of technical support has been allotted for 2013. As of 31 July 2013, 121 SSFs with total cost of Php43Mn have been launched, which benefitted around 16,000 MSMEs and created approximately 5,000 additional employment. Source: Department of Trade and Industry-Regional Operations and Development Group, Department of Trade and Industry-Bureau of Micro, Small and Medium Enterprise Development Already launched in 12 regions, entrepreneurs are equipped with the right entrepreneurial attitude and mind-set, enhanced managerial capabilities, appropriate knowledge on marketing preference, technology and lifestyles to help them establish and grow their businesses. Php17.3Mn budget allocated for 2013, to assist 10,000 MSMEs. As of 31 July 2013, the SME Roving Academy has capacitated a total of 957 SMEs and 704 would-be entrepreneurs. Source: Department of Trade and Industry-Regional Operations and Development Group 70
  72. 72. Empowering Consumers Fair Trade Law Compliance (January to April 2013) Total Number of DTI-Monitored Firms Resolution Rate Amount of fines collected 45,553 78% Php821,250 The DTI unceasingly monitors and enforces the compliance of retailers and sellers to Fair Trade Laws (FTLs) to protect the interest of consumers and to generate business. During the first four months of 2013, a total of 45,553 establishments were monitored nationwide, 59 firms of which, or 0.1%, were found not complying with FTLs and 46 firms were penalized and imposed a total of P821,250 in fines. Out of the 59 cases filed, 46 or 78% were resolved. For the period January to May 2013, combined operations of the NCIPR* member agencies resulted in seizures of 3,495,264 units of counterfeit and pirated goods with an estimated value of Php1.57Bn. *National Committee on Intellectual Property Rights Source: Department of Trade and Industry’s First Semester 2013 Accomplishment Report 71
  73. 73. Empowering Consumers Consumer Complaints Resolution (January to March 2013) Performance DTI Business Establishment Number % to Total Number % to Total Resolved 1,167 82.8 19,422 98.9 Pending 209 14.8 208 1.1 Referred / Endorsed 27 1.9 14 0.0 Dismissed 7 0.5 0 0.0 1,410 100.0 19,644 For Q1 2013, a total of 21,054 consumer complaints were reported at Consumer Welfare Desks (CWDs). Of this number, 93% or 19,644 were reported at business establishments (BEs) while 1,410 or 7% were at DTI. 100.0 TOTAL Resolved about 98% of total complaints reported. Remaining 2% was endorsed to other concerned government agencies, still on the process of resolution within DTI, or was dismissed. Source: Department of Trade and Industry’s First Semester 2013 Accomplishment Report 72
  74. 74. Agriculture and Fisheries Secretary Proceso J. Alcala Department of Agriculture 73
  75. 75. Midterm Milestones Agriculture and Fisheries Sector Posted record harvests in rice Achieved significant reduction in rice imports ↓ 53.9% 6.9 % Average annual decline in rice importation since 2010. Average annual growth since 2010 18.0 MMT US$1.4 Bn volume of production in 2012 Average, 2001 -2010 Production Growth 2010/2011 2011/2012 Average, 2011 -2012 2.5% 5.8% 8.1% Estimated forex savings due to decrease in imports 6.9% palay production grew by 8.1% in 2012, the highest record since 2000 Improved rice self-sufficiency levels 94.4% On-track 1 Tapped international niche market for rice 2012 rice self sufficiency in achieving 100% self sufficiency by the end of 2013. The Philippines exported premium and organic black rice varieties (first time in 40 years to export in commercial volume) to Singapore 45 MT ; Dubai 35 MT ; Kuwait and HK 15 MT ; and Germany , HK, Macau, Canada, Netherlands 11.55 MT We aim to export to Russia, Italy, Middle East , USA about 97 MT until year -end 1 more info on http://www.da.gov.ph/index.php/2012 -03-27-12-04-15/2012 -04-17-0930-59/4169 -da-exceeds -100-mt-rice-export -target 74
  76. 76. Midterm Milestones Agriculture and Fisheries Sector Posted record harvests in corn Average fish catch of a commercial purse seiner: 7.8 % Average annual growth since 2010 7.4 MMT volume of production in 2012 Average, 2001-2010 Production Growth Regenerated fishery resources 2010/2011 2011/2012 Average, 2011-2012 3.9% 9.3% 6.2% 7.8% Corn production posted a record growth of 11.4% in the 2013 Q1 Before closed season: <1 MT After closed season: 5 MT Based on results of the 3-month closed season in East Sulu Sea, Basilan Strait, and Sibuguey Bay. For every 1 kg of sardines left to spawn, be gained after the closed season . 27 kilos would Source: Bureau of Agricultural Statistics, National Economic and Development Authority (2013) Improved productivity in major commodities Yield (mt/ha) of various commodities, 2010-2012 Baseline, 2010 Ave., 2011 2012 Rice 3.62 3.76 White Corn 1.62 1.67 Yellow Corn 3.63 3.96 Coconut 0.80 0.84 Pineapple 37.37 39.75 Banana 20.19 20.36 Sugarcane 49.85 Maintained disease-free status 62.94 Commodity FMD-free without vaccination certified by the Office International des Epizooties - World Animal Health Organization in May 2011 Avian flu-free 75
  77. 77. Midterm Milestones Agriculture and Fisheries Sector Maintained stable food prices Maintained stable food prices Inflation Rates, Food and Non - Alcoholic Beverages (2006=100) 5.4 Further developed rural infrastructure from 2011 to June 2013: Below the annual PDP Target of 2.4 1.8 2011 2012 3% to 5% Farm-to-Market Roads 839.4 km better quality, concreted FMRs constructed/rehabilitated 2013 (as of Aug) Source: National Statistics Office (July 2013) Expansion and opening of new export markets Coco water Coco Sugar Muscovado Sugar Organic Coffee Fruit Juices (Calamansi ) Processed Peanut Fresh bananas Cavendish chips Bagoong Livestock and Poultry Irrigation Systems 101,698 ha 89,275 ha new areas generated areas restored 76
  78. 78. Agriculture and Fisheries Performance First Semester of 2013 The agriculture and fisheries sector GVA grew by 1.3% for H1 2013 1 Gross Value Added in Agriculture and Fisheries Value (million Php) Highlights H1 2013, at constant 2000 prices The A&F sector accounts for 10 .2% of the Philippine economy ( H1 2013, NSCB ) 200,000 180,000 ↓ 0.5% It employs 30 .4 % of the total labor force, or about 11.6Mn workers ( January 2013 round, BAS ) 160,000 Its total agricultural exports revenue amounted to around $1.6B, higher by 41 .5% the same period in 2010 ( Q1 2013 , BAS ) 140,000 120,000 Top Industry Performers in terms of 2013 H1 GVA growth are as follows : 100,000 80,000 Mango 60,000 2.1% 40,000 20,000 0 H1 2013 Crops Livestock Poultry 4.2% Pineapple H1 2012 4.6% Poultry 4.2% 6.6% Fisheries 4.6% 3.6% Livestock 2.1% Fisheries subsector rebounded to 4.6%, up from -3.1% 2 the same period in 2012 ( H1 2013, NSCB ) Fisheries Source: National Statistical Coordination Board 1 2 up from the 0.8% growth the same period in 2012 due to improved production and prices which led to increase in gross receipts of major fish species 77
  79. 79. Agriculture and Fisheries Performance First Semester of 2013 The sector posted modest farm output growth of 1.4% for H1 2013 Commodities with Notable Increases in Output: Fisheries Subsector Skipjack 30.28% Roundscad 24.46% Yellowfin Tuna 13.98% Crops Subsector Tobacco Source: Bureau of Agricultural Statistics 2013 11.18% Onion 8.53% Mango 6.70% Poultry Subsector Chicken 5.05% Duck Eggs 4.60% Livestock Subsector Hog 2.36% Dairy 2.35% 78
  80. 80. Department of Agriculture Accomplishments First Semester of 2013 Irrigation Network Services Farm-to-Market Roads Development Generated some 79,800 hectares of irrigated areas: about 9,100 from construction of new systems, some 62,800 from rehabilitation and approximately 7,900 from restoration of existing irrigation systems Installed/constructed around 2,300 small-scale irrigation projects Serviced some 52,600 individual beneficiaries Constructed 28kms of concrete farm-to-market roads Rehabilitated more than 150kms of existing farm-to-market roads Agricultural and Fishery Equipment and Facilities Support Services Distributed around 88,600 units of postharvest equipment and machineries such as dryers, threshers, milling equipment, and postharvest equipment and machineries for fisheries Constructed 396 postharvest facilities for drying, storage, and processing Constructed around 110 linear meters of foot bridges/ foot paths Maintained 65 mariculture parks and constructed 3 new municipal fishports Serviced some 1,300 individual and 170 group beneficiaries Production Support Services Established some 2,700 production facilities including nurseries, greenhouses, hatcheries, bio-mixing plants, and sea cages Distributed around 70,900 production equipment and machineries including tractors, tillers, cultivators, transplanters, sprayers, mist blowers, harvesters, reapers, and fishery equipment Upgraded 30 and maintained about 790 production-related facilities Serviced some 155,400 individual and about 1,400 group beneficiaries 79
  81. 81. Department of Agriculture Accomplishments First Semester of 2013 Marketing Support Services Facilitated establishment of 5 trading post/ centers Established 57 food terminals Facilitated 33 Livestock Auction Markets (LAMs) Extension Support, Education and Training Services Conducted about 37,300 training and training-related events for some 63,200 participants Provided scholarship grants to a total of 485 scholars, both for degree and non-degree courses Disseminated more than 660,000 copies of information, education and communication (IEC) materials including print and audio-visuals. Research and Development Credit Facilitation Services Regulatory Services Policy and Planning Services Funded/conducted about 1,800 research and development activities Funded/established, upgraded, and maintained a total of 145 research facilities Assisted some 10,800 individuals to grant or access loans and insurance Made available a total Php306Mn for credit, loans, insurance for farmers and fisherfolk Maintained disease-free status on Foot and Mouth Disease (without vaccination) and Avian Influenza, and strengthen disease prevention activities across all commodities Issued about 1.3Mn regulatory documents including certificates, clearances, permits, licenses, and registrations Implemented 361 Coastal Resource Management projects (i.e. fish sanctuaries, artificial reefs, propagules planting) Conducted about 1,600 stakeholders consultations Conducted 43 evaluation studies 80
  82. 82. Sector Targets 2013 and Beyond Growth in Agriculture and Fisheries Gross Value Added (GVA) Attain and Sustain Self-Sufficiency in Rice 100% by the end of 2013 Maintain Stable Food Prices 3.5% to 4.5% 2013 2014 2015 2016 3.5-4.5 3.2-4.2 3.3-4.3 3.5-4.5 Crops 4.5-5.5 4.0-5.0 3.8-4.8 4.0-5.0 Livestock 1.2-2.2 1.2-2.5 1.5-3.0 1.6-3.5 Poultry 4.2-5.2 4.2-5.2 4.2-5.2 4.2-5.2 Fisheries 1.5-3.0 1.5-2.5 2.3-3.0 3.8-2.5 (or lower) AF GVA increased (%) inflation rate of basic food commodities Increase Agriculture Exports 10% or higher Increase the total value of agriculture exports Source: Philippine Development Plan – Results Matrix 81
  83. 83. Way Forward: Sector Priorities and Directions 2013 and Beyond 1 Attain and Sustain Food Security 2 Establish Enabling Environment for Enhanced Agriculture and Fisheries Competitiveness 3 Increase Agriculture and Fisheries Climate Resiliency 4 Develop Focus Agro-Industries for Inclusive Growth 82
  84. 84. 83
  85. 85. Attain and Sustain Food Security Sector Priorities and Directions The Philippine Food Staples Sufficiency Program (FSSP) is geared towards the attainment of 100% rice self-sufficiency by end of 2013. Key Strategies: ● Raise farm productivity and competitiveness Accelerate investments in irrigation, post harvest facilities and mechanization Encourage use of suitable high-quality seeds, fertilizers, and other ICM Sustain research and development (R&D) in new varieties and crop management Enhance delivery and effectiveness of extension services Boost yield and overall productivity growth in rainfed lowland rice areas Harness the potential of high-elevation and upland rice ecosystems ● Enhance economic incentives and enabling mechanisms Implement NFA reforms (i.e. price support and procurement) Strengthen credit provision to small farmers Expand coverage of crop insurance. ● Manage food staples consumption Encourage consumption of unpolished rice (brown rice or pinawa) Promote production and consumption of other food staples (e.g. white corn, kamote, saba) Reduce food wastage Commitments: Increase volume of production of palay, white corn and cassava No importation beyond international commitments Exportation of premium rice to balance the Minimum Access Volume commitment Reduce the cost of production to levels competitive with the border 84
  86. 86. Establish Enabling Environment for Enhanced Agriculture and Fisheries Competitiveness Sector Priorities and Directions Commitments: Increase efficiency in investments in agriculture and fisheries − Fully utilize allocated funds for natural infrastructure (e.g., mangroves, watershed, soil and water, coral cover) and hard infrastructure (e.g. irrigation, FMRs, postharvest, trading centers) Raise productivity and production of major commodities − Increase yield of major crops (e.g. rice, corn, high value crops, coconut) − Increase in volume of production of livestock and fisheries Strengthen regulatory capacity − Ensure compliance with international standards (or equivalence) − Maintain FMD-free and Avian Flu-free status and protect the borders from the entry of pests and diseases Intensify market development efforts − Develop new export commodities and new export markets; Establish market-related infrastructure 85
  87. 87. Increase Agriculture and Fisheries Climate Resiliency Sector Priorities and Directions In 2012, the Philippines adopted the APEC-initiated “Adaptation and Mitigation Initiative in Agriculture” (AMIA) as the DA’s system-wide program on climate change. Commitments: Invest in climate-resilient irrigation infrastructures with improved design standards and construction protocols Construct farm-tomarket roads that are permanently surfaced and with proper drainage Invest in the development and improvement of agriculture and fisheries technologies adaptive to climate change and extension Facilitate credit access, develop risk transfer mechanisms (e.g. weather-based insurance), and expand insurance coverage to other commodities (e.g. fisheries, livestock) Strengthen and modernize data collection Intensify of climate change-related information, education and communication (IEC) efforts Strengthen soil and water conservation and management program 86
  88. 88. Focus Agro-Industries for Inclusive Growth Sector Priorities and Directions Establish coconut agro-industrial hubs Engage a majority of the three million coconut farmers and households in activities and enterprises Develop emerging coconut-based products (e.g. coco water, coco sugar, virgin coconut oil, coco coir, coco nets, cooking oil, coconut milk and coco diesel blend) with higher value than the traditional copra-based enterprises Ensure farmers participation in enterprises from supplying raw materials to employment in processing plants Link social protection to small coconut farmers’ participation in industry development 87
  89. 89. Focus Agro-Industries for Inclusive Growth Sector Priorities and Directions Develop fishery-based agro-industries Regenerate, protect, and promote responsible extraction of resources Establish payaos in the eastern seaboard and west of the Philippine Sea to encourage the commercial fishers to leave the municipal waters to the municipal fishers; set up small payaos within municipal waters (15 km. from the shoreline) so small fishers can easily return home during inclement weather Provide appropriate infrastructure and facilities to increase value of small farmers’ fish catch Develop enterprises (e.g. seaweed growing and processing, salt making, fish processing) that would provide income opportunities to fishing households Implement a mangrove restoration and multi-specie hatchery program that will allow fisher families to raise blue crabs, soft shell crabs and others in designated rehabilitated mangrove areas Secure home lots and land-based livelihoods for fishing households 88
  90. 90. Tourism Secretary Ramon R. Jimenez Department of Tourism 89
  91. 91. Mandate of DOT As provided by the Tourism Act of 2009 (RA 9593) Planning and regulatory agency in the development and promotion of the tourism industry, both domestic and international, in coordination with its attached agencies and other government instrumentalities Instill in Filipinos the tourism industry’s fundamental importance in the generation of employment, investment and foreign exchange 90
  92. 92. International Visitor Arrivals RANK COUNTRY 1 KOREA 2 USA 3 JAPAN 4 CHINA 5 AUSTRALIA 6 TAIWAN 7 SINGAPORE 8 CANADA 9 HONGKONG 10 UNITED KINGDOM 11 MALAYSIA 12 GERMANY 13 OTHERS GRAND TOTAL INCLUDING OTHERS JAN - JUNE 2012 474,685 354,259 195,504 150,749 92,648 114,269 73,015 65,503 57,790 57,181 49,788 34,189 423,926 2,143,506 JAN - JUNE 2013 585,282 364,506 209,812 199,157 103,286 86,076 86,290 68,430 65,696 60,234 54,154 37,025 460,645 2,380,593 GROWTH RATE 23.30% 2.89% 7.32% 32.11% 11.48% -24.67% 18.18% 4.47% 13.68% 5.34% 8.77% 8.30% 8.66% 11.06% Source: Arrival/Departure Cards and Shipping Manifests 91
  93. 93. International Visitor Arrivals 2013 per Month 500,000 18.0% 15.5% 436,079 450,000 418,108 411,064 2013 Percentage Change, RHS 417,392 12.5% 361,925 400,000 2012 377,879 375,083 369,073 362,062 349,779 350,000 14.0% 323,725 321,930 16.0% 14.0% 12.0% 300,000 11.3% 10.0% 250,000 8.0% 200,000 8.0% 6.1% 6.0% 150,000 4.0% 100,000 2.0% 50,000 - 0.0% Jan Feb Mar Apr May Jun 92
  94. 94. Visitor Receipts (in US$ Million) 12,000.0 10,774.6 CAGR = 29.6% 10,000.0 8,297.7 8,000.0 6,391.4 CAGR = 5.2% 6,000.0 4,864.0 3,817.8 4,000.0 2,994.0 2,428.7 2,236.0 2,490.2 2008 2009 2010 2,000.0 0.0 ACTUAL 2011 2012 2013 2014 2015 2016 PROJECTED *CAGR – cumulative average growth rate 93
  95. 95. Strategic Directions National Tourism Development Plan (NTDP) 2011 - 2016 1. Develop and market competitive tourist products and destinations 2. Improve market access, connectivity and destination infrastructure 3. Improve institutional governance and human resources 94
  96. 96. 1. Develop and market competitive tourist products and destinations (NTDP 2011 – 2016 Strategic Directions) Product Portfolio Nature Tourism Cultural Tourism Sun and Beach Tourism Leisure and Entertainment Tourism MICE & Events Tourism Health,Wellness, and Retirement Tourism Cruise and Nautical Tourism Diving & Marine Sports Tourism Education Tourism 95
  97. 97. 1. Develop and market competitive tourist products and destinations (NTDP 2011 – 2016 Strategic Directions) PRODUCT – MARKET STRATEGIES PRESENT MARKETS PRESENT Market Penetration NEW Product Development Aggressive promotion strategies Quality improvement strategies targeted to Japan, South Korea, that seek to increase daily tourist USA, China to increase the number expenditure through higher quality of overnight visitors. tourist products and services. Main Strategy NEW Market Development Diversification Aggressive promotion strategies targeted to Australia, Singapore, Malaysia, Canada markets to increase the number of overnight visitors. Niche Strategy Product development and diversification strategies to increase the average tourist length of stay. Secondary Strategy 96
  98. 98. 2. Improve market access, connectivity and destination infrastructure (NTDP 2011 – 2016 Strategic Directions) DOT-DPWH Road Infrastructure Program In Php Million Developed the Tourism Road Infrastructure Project (TRIP) Prioritization Criteria Endorsed for approval by the Tourism Coordinating Council 167 road projects with total of 598kms worth Php12.0Bn for FY 2013 Budget Organized capacity building for CTWG and RTWGs 97
  99. 99. Air Seat Entitlements and Utilization 2012 MARKETS Korea Japan China Taiwan Australia Singapore Hong Kong Canada Malaysia United Kingdom Germany India Indonesia Thailand Vietnam TOTAL SEAT ENTITLEMENTS PH FOREIGN 1,482,000 1,482,000 1,856,400 1,856,400 702,000 702,000 522,600 522,600 312,000 208,000 2,280,044 2,280,044 1,367,600 1,367,600 109,200 109,200 354,640 354,640 218,400 218,400 109,200 109,200 109,200 109,200 156,000 156,000 355,680 355,680 312,000 312,000 PH 1,177,800 533,624 617,760 239,358 250,068 882,544 958,880 109,200 355,680 0 0 99,112 147,368 313,976 122,304 10,246,964 10,042,964 5,807,674 ENTITLEMENT UTILIZATION % FOREIGN 79.47% 1,339,624 28.75% 247,520 88.00% 182,936 45.80% 178,204 80.15% 95,368 38.71% 721,136 70.11% 897,468 100.00% 0 100.29% 346,840 0.00% 0 0.00% 0 90.76% 0 94.47% 0 88.27% 158,600 39.20% 0 56.68% 4,167,696 % 90.39% 13.33% 26.06% 34.10% 45.85% 31.63% 65.62% 0.00% 97.80% 0.00% 0.00% 0.00% 0.00% 44.59% 0.00% 41.50% 98
  100. 100. Volume of Flights, Passengers and Visitors per International Airport January – June (2012 – 2013) 2012 International Airports Manila Kalibo Cebu Clark Davao Iloilo 2013 % Share of % Share of Total Visitors from Total Total Number Visitors from Total Number of of Total Number of Total Number Passengers Passengers Flights of Passengers Passengers Flights 18,945 3,498,656 45.60% 20,839 3,683,137 46.60% 864 127,162 99.50% 1,083 158,740 99.80% 2,392 376,577 79.10% 2,789 429,126 81.30% 1,913 208,690 46.70% 2,590 289,749 44.10% 76 12,014 35.10% 54 7,879 46.20% 4 377 100.00% 131 14,681 12.70% International Airports Manila Kalibo Cebu Clark Davao Iloilo Flights % Difference 2012 - 2013 10.00% 25.30% 16.60% 35.40% -28.90% 3175.00% Passengers % Difference 2012 - 2013 5.30% 24.80% 14.00% 38.80% -34.40% 3794.20% 99
  101. 101. Room Capacity 2012 Destinations Northern PH Available Room Number of Establishments New Major Accommodation Facilities in 2012 Fairmont Hotel and Raffles Suites 71,804 2,248 NCR 31,790 320 Central Luzon 15,024 489 Other Regions 24,990 1,439 61,978 3,220 Western Visayas 15,200 635 Central Visayas 27,447 1,306 Dohera Hotel – Cebu Other Regions 19,331 1,279 Microtel Accropolis – Quezon City 28,922 1,405 Northern Mindanao 8,113 380 Southern Mindanao 9,613 404 11,196 621 162,704 6,873 Central PH Southern PH Other Regions Total PH Quest Hotels & Conference Ctr Cebu Calyx Center – Cebu Bellevue Resort – Bohol Tunes Hotel – Cebu Luxent Hotel – Quezon City 100
  102. 102. Room Projection from 2013 to 2016 Destination Clusters Island Grouping Room Supply (Available + Pipeline) Available in 2012 In the Pipeline Room Gap In Critical Destination Clusters Northern PH 71,804 8,206 16,025 Central PH 61,978 5,129 20,757 Southern PH 28,922 1,686 570 162,704 15,021 37,352 Total PH Critical Cluster Destinations Room Demand Available Room In the Pipeline Room Gap Metro Manila & CALABARZON 54,818 37,311 7,330 41,402 27,447 2,124 15,804 8,549 130 7,125 9,851 6,855 106 Current accommodation development in the pipeline covers only 40% of room requirement 11,831 Bicol Key demand cities outside of Manila are: Cebu, Panglao, Bicol, Cordillera 10,177 Central Visayas Manila will still need the most rooms between now and 2016 2,890 Cordillera 101
  103. 103. 3. Improve institutional governance and human resources (NTDP 2011 – 2016 Strategic Directions) Programs Regulatory Impact Assessment (RIA) – Assist pilot LGUs to design and implement a RIA of their local ordinances affecting tourism Hotel and Resort Quality Assurance and Accreditation System (HRQAAS) – Strengthen institutional arrangement for implementation of new standards, rating system and mandatory accreditation Tourism Industry Skills Development Program (TISDP) – Develop a human resources plan/ strategy for tourism 102
  104. 104. 3. Improve institutional governance and human resources (NTDP 2011 – 2016 Strategic Directions) Programs Improve the Philippines ranking in the World Economic Forum (WEF) Travel and Tourism Competitive Index Reduce business cost and improve compliance Implement the new standards and accreditation system Train 5,000 tourism workers Certify 500 tourism professionals under the ASEAN MRA 103
  105. 105. Highlights of Major Accomplishments (January - June 2013) Develop and market competitive tourist products and destinations As of June 2013, 88 local development plans were evaluated, monitored or updated. Signed a “Statement of Intent on SMART Visa” during the Travel and Tourism High Level Meeting in the 22nd WEF on East Asia. Spearheaded the development of 89 tourism products in the various regional destinations for January – June 2013 Signed an Agreement with the Department of Environment and Natural Resources (DENR) under the Biodiversity Partnerships Project (BPP), a project funded by the Global Environment Fund. 104
  106. 106. Highlights of Major Accomplishments (January - June 2013) Improve market access, connectivity and destination infrastructure Signed convergence program with the Department of Public Works and Highways with a total budget of Php12Bn for 2013 and Php14.4Bn for 2014. – 167 Road projects, totalling to 598km of roads leading to major and secondary destinations. Facilitated the lifting of the EU ban on PAL flying to European destinations. 105
  107. 107. Highlights of Major Accomplishments (January - June 2013) Improve institutional governance and human resources As of June 2013, 110 capacity building programs for local government units in the areas of planning, product development, statistics, policy and governance, as well as for industry workers to enhance skills and competencies has already been done Accredited 1,357 various tourism establishments as of June 2013 Signed a Memorandum of Understanding with DSWD and the USAID for the Implementation of the “OneStep Project” Adopted a New Rating System based on international standards for the Philippine hotel industry. Signed a Memorandum of Agreement (MOA) with media conglomerate ABS-CBN to launch Bantay Kalikasan’s Green Initiative, a joint program involving the government, media and academe. 106
  108. 108. Targets, 2013 - 2016 INDICATORS 2013 2014 2015 2016 International Tourists Visitor Arrivals (Mn) 5.5 6.8 8.2 10.0 Length of Stay (nights) 8.0 8.0 8.0 8.0 4,914.0 5,431.0 5, 939.0 6,470.0 205.4 269.9 350.4 455.0 44.1 47.7 51.7 56.1 176.2 191.0 206.9 224.2 4.7 4.7 4.7 4.7 Average Daily Expenditure (Php) 2,580.0 2,593.0 2,739 2,922 Domestic Receipts (Php Bn) 1,298.6 1,409.2 1,607.1 1,852.1 Average Daily Expenditure (Php) Visitor Receipts (Php Bn) Domestic Tourists Domestic Travellers (Mn) Domestic Trips (Mn) Length of Stay (nights) 107
  109. 109. Economic Impact Projection 2013 - 2016 INDICATORS 2013 2014 2015 2016 Gross Domestic Product Total Visitor Receipts (Php Bn) Tourism GVA (Php Bn) Share to GDP (%) 1,504.0 1,679.1 1,957.5 2,307.1 748.3 835.4 974.0 1,147.9 6.7 7.0 7.8 8.7 4.9 5.4 6.3 7.4 13.0 14.2 16.2 18.8 Employment Tourism Employment (Mn) Share to National Employment (%) 108
  110. 110. 109
  111. 111. Energy Secretary Carlos Jericho L. Petilla Department of Energy 110
  112. 112. Energy Reform Agenda (ERA) “Energy Access for More” A key priority of government to mainstream access of the greater majority to reliable energy services and fuel, most importantly, local productivity and countryside development Good Governance thru stakeholder participation, multi-sectoral partnership and use of information and communications technology (ICT) Ensure Energy Security Achieve Optimal Energy Pricing Develop a Sustainable Energy System Promote Transparency Initiatives, Implementation and Information 111
  113. 113. Power Sector Reform Issued implementing rules and regulations for National Electrification Administration (NEA) Reform Act of 2013 Launched Retail Competition and Open Access on 26 June 2013 (RCOA) Operationalized policy support for the Interim Mindanao Electricity Market (IMEM) Reformed ailing electric cooperatives through implementation of strict compliance mechanism including power generation companies Continued oversight in the Operation and Governance of the Wholesale Electricity Spot Market (WESM) Rules 112
  114. 114. Luzon Supply-Demand Outlook 2013-2020 Megawatts On Available Capacity: Apr-May 2015: Projected Deficit of 184MW Mar-Jul 2016: Projected Deficit of 240MW to 635MW On Available Capacity + Committed*: Apr-Jun 2017: Projected Deficit of 200 to 450MW Mar-Dec 2018: Projected Deficit of 270 to 940MW Notes Demand curve as plotted includes total of peak demand and required Reserve Margin (RM) i.e. 4% regulating reserve and contingency and dispatchable reserve requirement 4.2% peak demand growth rate resulted from observed 0.6 elasticity ratio of demand for electric power with national economic growth applied to 7% GDP growth rate (GR) target for 2013-2015. 4.8% peak demand growth rate resulted from observed 0.6 elasticity ratio of demand for electric power with national economic growth applied to 8% GDP growth rate (GR) target for 2016-2020. Assumed 6.6% average forced outage of the total dependable capacity * Committed projects are those which are in various stages of construction and have complied with all permitting / licensing requirements from all concerned agencies and local government units; also, they are those which have achieved financial closure. 113
  115. 115. Megawatts Visayas Supply-Demand Outlook 2013-2020 On Available Capacity: Nov-Dec 2014: Projected Deficit of 30 to 90MW Apr-Dec 2015: Projected Deficit of 80MW to max 220MW On Available Capacity + Committed: Dec 2015: Projected Deficit of 60MW Apr-Jun 2016: Projected Deficit of 70 to 100MW Dec 2017-Dec 2018: Projected Deficit of 120 to 305MW Notes Demand curve as plotted includes total of peak demand and required Reserve Margin (RM) i.e. 4% regulating reserve and contingency and dispatchable reserve requirement 7 % peak demand growth rate resulted from observed 1 elasticity ratio of demand for electric power with national economic growth applied to 7% GDP growth rate (GR) target for 2013-2015. 8 % peak demand growth rate resulted from observed 1 elasticity ratio of demand for electric power with national economic growth applied to 8% GDP growth rate (GR) target for 2016-2020. Assumed 7% average forced outage of the total dependable capacity 114
  116. 116. Mindanao Supply-Demand Outlook 2013-2020 Megawatts On Available Capacity: 2013: Projected Deficit of 50 to 110MW 2014: Projected Deficit of 50 to 190MW 2015: Projected Deficit of 120 to 280MW Notes Demand curve as plotted includes total of peak demand and required Reserve Margin (RM) i.e. 4% regulating reserve and contingency and dispatchable reserve requirement 5.6% peak demand growth rate resulted from observed 0.8 elasticity ratio of demand for electric power with national economic growth applied to 7%GDP growth rate (GR) target for 2013-2015. 12.8 % peak demand growth rate resulted from observed 1.6 elasticity ratio of demand for electric power with national economic growth applied to 8%GDP growth rate (GR) target for 2016 8% peak demand growth rate resulted from observed 1 elasticity ratio of demand for electric power with national economic growth applied to 8% GDP growth rate (GR) target for 2017-2020 Assumed 3.41% average forced outage of the total dependable capacity 115
  117. 117. Megawatts Mindanao Supply-Demand Outlook 2013-2020 On Available Capacity + Committed: Nov-Dec 2017: Projected Deficit of 20 to 50MW 2018: Projected Deficit of 50 to 200MW Notes Demand curve as plotted includes total of peak demand and required Reserve Margin (RM) i.e. 4% regulating reserve and contingency and dispatchable reserve requirement 5.6 % peak demand growth rate resulted from observed 0.8 elasticity ratio of demand for electric power with national economic growth applied to 7%GDP growth rate (GR) target for 2013-2015. 12.8% peak demand growth rate resulted from observed 1.6 elasticity ratio of demand for electric power with national economic growth applied to 8% GDP growth rate (GR) target for 2016 8% peak demand growth rate resulted from observed 1 elasticity ratio of demand for electric power with national economic growth applied to 8% GDP growth rate (GR) target for 2017-2020 Assumed 3.41% average forced outage of the total dependable capacity 116
  118. 118. Interventions on the Mindanao Supply Situation Recommendations Status Operate Illigan Diesel Power Plant (IDPP) Currently running at 60MW and scheduled to be in full operations by October 2013 at 98MW Interruptible Load Program (ILP) Mechanism which allows for the compensation of customers of a distribution utility (DU) for voluntarily taking itself off the grid during peak demand. With Energy Regulatory Commission (ERC) approving the new rates based on Davao Light’s petition, large customers will be encouraged to join. Interim Mindanao Electricity Market (IMEM) Issuance of Department Circular (DC) 2013-01-001 dated 9 January 2013 which directed PEMC to develop and implement an IMEM Target commercial operations by 26 September 2013 Modular Genset Scheme Fastest way of deploying the needed generating capacity in the island DOE has directed NEA to expediently implement the program Will provide supply until new capacities come online by 2015 EO 137, “The Mindanao Modular Generator Sets Program”, promulgated and its IRR already signed Creation of One-Stop Shop Appointed Investment Officers to facilitate the processing of applications, permits and licenses of energy investors. Develop Mindanao Energy Plan (MEP) Proposed conduct of consultations is by September 2013 117
  119. 119. Interventions on the Mindanao Supply Situation Recommendations Privatization of Power Barge 101-104 Balo-I Flood Control Project Status Indicative bidding is by Q3 2013 DPWH will re-file to NEDA-ICC for the approval of the project This will maximize the output of Agus 1 and 2 Hydroelectric Plants and address flooding in Balo-I Plain Agus 6 Unit 1 & 2 Uprating Project PSALM Board has approved and confirmed the project implementation including the realignment of budget from National Power Corp.- Operations and Management Agreement – Maintenance and Other Operating Expenditures (NPC-MOA MOOE) to PSALM. Indicative bidding is by Q3 while awarding is by Q4 2013. Reservoir Management of Pulangi IV NPC is flushing bottom sluice gates to minimize water spillage during rainy season and to address sediment buildup Privatization of Agus-Pulangi Complexes Under discussion of Joint Congressional Power Committee (JCPC) Visayas-Mindanao Interconnection Project Feasibility Study was completed in March 2013. The target project completion is by 2018 118
  120. 120. Indigenous Fossil Fuel Development Production Unit 2011 Gas Bn Cubic Feet 2012 H1 2013 140.4 137.77 No. of Contracts Supervised/Monitored 67.92 26 Condensate Coal Mn Barrels 5.1 4.75 2.32 Mn Metric Tons (@10,000 BTU/lb) 6.9 7.4 2.9 71 11 Coal Operating Contracts awarded 3 Petroleum Service Contracts awarded and 1 endorsed to the Office of the President 119
  121. 121. Enhanced Renewable Energy Development Feed-in-Tariff (FIT) System Highlights – FIT Rules approved by ERC on 12 July 2010 and took effect on 12 August 2010 – ERC approved the FIT Rates on 27 July 2012 – Issuance of Department Circular 2013-05-009 prescribing DOE Guidelines for the Selection Process of Renewable Energy (RE) Projects Under FIT System and the Award of Certificate for FIT Eligibility FIT Monitoring Board Summary (as of July 2013) With Certificate of Confirmation of Commerciality For Conversion Resource No. of Projects Capacity (MW) No. of Projects Capacity (MW) Hydro 51 504.2 6 47.6 Wind 9 548.5 5 339.5 Solar Biomass 11 10 160 76.7 3 1 80 1.1 81 1,289.4 15 468.2 Total Note: Department Circular No. 2009-07-0011 entitled “Guidelines governing a transparent and competitive system of awarding renewable energy service/operating contracts and providing for the registration process or RE developers” is currently being revisited to facilitate the processing of RE Applications. Target date of completion of 249 pending RE applications is on November 2013 120
  122. 122. Promoted Energy Efficiency and Conservation (EE&C) Actual Savings (in MMBFOE) National EE&C Programs 2010 2011 2012 Information, Education and Communication Campaign 3.45 4.56 4.16 Voluntary Agreements 3.60 3.24 3.41 14.27 15.3 18.37 Government Energy Management Program (GEMP) 0.22 0.28 0.26 Energy Management Program 3.26 3.80 3.43 Phil. Energy Efficiency Project - 0.29 0.50 Total Savings 24.80 27.48 30.13 Deferred Capacity Addition (MW) 1,104 1,222 1,341 Energy Standards and Labeling MMBFOE – Million Barrels of Fuel Oil Equivalent 121
  123. 123. Household Electrification Program (HEP) HEP is an ongoing program providing electricity to households Year 2010 Luzon Visayas Mindanao Total 648 167 1,935 2,750 2012 (1st Batch) 2,308 1,864 2,288 6,460 2012 (2nd Batch) 750 435 2,215 3,400 2013 (1st Half) 2,136 1,702 3,062 6,900 Total 5,842 4,168 9,500 19,510 122
  124. 124. Good Governance Operationalized www.kuryente.org.ph providing public information on electricity rates and generation capacity Operationalized www.wattmatters.org.ph providing public information on energy consumption wattage rating and energy efficiency performance of different household electrical appliances 123
  125. 125. 2013 Onwards: Nurturing Sustainable Growth Continuing Activities – Household and Sitio Electrification – Biofuels blending (E10 and B5 Mandate) – Energy Supply Demand Outlook – Energy efficiency and conservation through Standards and Labeling Program – Renewable energy installation – E-Trike (developmental and scale-up) – Clean energy technologies (Euro 4) – Web based availability of energy information – Accelerated development of indigenous resources (Philippine Energy Contracting Round 5) Special Activities – Mindanao power supply initiatives (Modular Genset) – Improved grid reliability 124
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