Republic of the Philippines

Capital: Manila
Currency: Peso
Geography: Archipelago of 7,107 islands - Three Island Groups: Luzon,
Visayas, and Mindanao
Climate: Tropical marine
Population:
107 Million, 12th most populous country in the world
1,8 % population growth rate
Average age of the population 23,5 years
Ethnicity:
Christian Malay 91.5%
Muslin Malay 4%
Chinese 1.5%
Others 3%
Religions
Roman Catholic 83%
Protestant 9%
Muslim 5%
Official languages: Filipino and English
Government: Democratic, presidential form with a bicameral congress
Administration: 17 regions, 80 provinces, 138 cities, 1,496
municipalities, and 42, 025 barangays
Economy: $ 272 Billion 2013, GDP growth 7,2 % in 2013
The second fastest growing country in Asia, only second to China
with 7,7 %
Expected GDP growth rate for 2014 - 6,4 % and for 2015 - 6,7 %
Education: National (public and private) - over 400,000 graduates
annually
After winning its first investment-grade rating from the three major
credit rating companies in 2013, Philippines received the highest credit
rating as of now in May 2014 when Standard & Poor raised the rating
again by one notch.
Standard & Poor, BBB
Fitch, BBB Moodys, Baa3

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Environment-Flood Control
Opportunities for EU businesses
1

Flood Control-Environment in the Philippines

Flood Control sector in the Philippines
According to Pagasa, the Philippines governmental agency that monitors
climate, more than 22 typhoons are affecting The Philippines every year.
In recent years:
Metro Manila
Ondoy (Ketsana in 2009) has deeply affected population living in
Metro Manila, causing 464 deads and more than 237 million USD
damages to agriculture and infrastructure alone, almost 1
millions inhabitants were flooded and needed evacuation.
Pepeng (Parma in 2009) has caused 465 deads and 417 million
USD damages to agriculture and infrastructures.
Habagat South Moonson rain (2012) has caused 109 deads and
50 millions euros damages. Almost 1 million people were
affected again
Habagat South Moonson rain (2013) has caused 27 deaths and
10 millions euros damages, 689 000 population were affected.
Outside Manila
Bopha (Pablo) in Davao (2012) has caused 1900 deaths and 1
billion USD damages.
Hayan (Yolanda) in Visayas (2013) has caused 6,241 deaths and
809 million USD damages.
Nesat (Pedring) in Luzon (2011) has caused 333 million USD
damages.
Frequency of typhoons causing severe damages, displacing million
people in Metro Manila and even killing thousands of people is
significantly increasing due to climate change. Relocation of illegal
settlers (often in flooding areas), solid waste management improvements
to avoid clogging of existing drainage systems might improve resilience
but will not solve the situation which become increasingly difficult to bear
politically (insured people vs flooding risks are very low and insurance
companies are not willing to cover those risks, which are qualified as acts
of god and excluded from insurance policies) . Infrastructures works are
dearly needed, moreover some urban part of Manila are sinking below
sea level due to the over tapping of the ground water at an alarming rate
of several centimeters which is undoubtedly worsening the problem.
Philippines Flood Control business
Metro Manila

In

World Bank funded realization of a master plan for flood control

project in Metro Manila under the Department of Public Works
and Highways (DPWH), it has determined that 11 projects are
needed for a total amount of 350 billions PhP (5-6 billions euros)
to increase flood resilience in Manila. This master plan from
World Bank forecasts completion by 2035. A first leg of this has
recently materialized with the approval by NEDA of the Laguna
Lake Expressway Dyke project (122, 2 billions PhP project) to
construct a dyke that will serve as an expressway (serving new
real estate developments there) on the East shore of Laguna de
Bay lake.
In 2012, Philippines government has approved a budget of 5
billions PhP for most urgent works, including 1.6 billions PhP was
allocated to Metro Manila Development Authority to rehab its 12
pumping stations (Libertad, Quiapo, Tripa De Galina, Pandacan,
Valencia, Binondo, Aviles, Paco, Makati, Sta. Clara, Balete, and
Arroceros).
the province
Most Local Government Units (LGU) have their own Flood Control
projects to implement but most of them rely on resource and
funding from central government and namely Department of
Public Works and Highways and Cooperation agencies such as
Japan International Cooperation Agency, USAID, and others to
perform feasibility studies and implement their projects. Some
LGU nevertheless are implementing projects that are increasing
resilience towards climate change.
Most of the time, local contractors are realizing the civil works
but equipment are not readily available: dredging equipment,
pumps, flood gates, automatic trash racks, etc.

At the moment and since most flood control projects were financed by
JICA before, most flood control projects until now in the Philippines are
using equipment from Japan. Since feasibility study were now funded by
World Bank and realized by international consultancy firms, one would
expect that market will open up to other technology providers and
equipment manufacturers.
Advantages
Master plan for Flood mitigation in Manila is completed, funding have
been made available to implementing agency (MMDA) for the rehab of
existing infrastructures (25 million euros) and funds are available
within DPWH to start implementing the master plan from World Bank.
DPWH secretary, Rogelio Singson has visited The Netherlands in 2012
and he reported to the press that he was impressed by the quality and
efficiency of what has been done in this country and more generally in
low lying countries of Europe where lands are under sea level.
The government has named the industry as priority investment area.
Fiscal and non-fiscal benefits are offered to the qualified investors.
Additional incentives apply to the investors that locate in designates
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zones of the Philippine Economic Zone Authority (PEZA). By the end of

2013 PEZA had named 40 IT parks and 157 single buildings to qualify
as preferential zone.
Income tax holiday 100 % exemption from corporate income tax
from 4 to 6 years
Additional 3 years may be granted for expansion project
Upon expiry of the Income Tax Holiday 5 % Special Tax on Gross
Income and exemption from all national and local taxes
Tax and duty free importation of equipment and parts
Exemption from wharfage dues on import shipments of equipment
VAT zero-rating of local purchases of goods and services, including
land-based telecommunications, electrical power, water bills and
lease on the building
Exemption from payment of any and all local government imposts,
fees, licenses or taxes. However, while under Income Tax Holiday,
no exemption from real estate tax, but machineries installed and
operated in the economic zone for manufacturing, processing or for
industrial purposes shall not be subject to payment of real estate
taxes for the first three years of operation of such machineries.
Production equipment not attached to the real estate shall be
exempt from real property taxes
Exemption from expanded withholding tax
Non-resident Foreign Nationals may be employed by PEZAregistered Economic Zone Enterprises in supervisory, technical or
advisory positions
Special Non-Immigrant Visa with Multiple Entry Privileges for the
following non-resident Foreign Nationals in a PEZA-registered
Economic Zone Enterprise: Investor/s, officers, and employees in
supervisory, technical or advisory position, and their spouses and
unmarried children under twenty-one years of age.
Growth potential
Of course, with the completion of master plan for Metro Manila from
World Bank, loans for reconstruction and disaster relief made available
by World Bank and Asian Development Bank (1 billion USD each) and
world attention focused on the Philippines after Yolanda disaster,
expectations are high that implementation phase will be kicked off in
the very near future. Philippines has been qualified by world
organizations as a priority since the country will be one of the first and
most affected by climate change.
Needs are indeed very important but political will and funding
availability are key for these projects. Of course, market size is huge
and will attract most players, once projects will be bid out.

Opportunities for European SMEs

Innovative

and/or

specialized

equipment

manufacturers,

dredging

companies, engineering specialists, dams and reservoirs specialists and

specialized logistic companies might find opportunities in the flood
control market in the Philippines. Most probably best approach would be
to target local civil contractors who will qualify and join the public
offerings organized by the Philippines government.
Propose technology and equipment thru local distributors to international
consultancy firms already located in the Philippines who might be
contacted to perform feasibility studies for Local Government Units, so
that they can be specified in the requirements of the tenders.
Another approach to be considered would be to tie up with or supply
equipment to international civil contractors, used to these very large
infrastructures projects, that will join the largest biddings from the
Philippines government.

Challenges for the flood control sector in the Philippines

Flood control projects are typical infrastructure projects that will not
generate revenue. It cannot be privatized or are difficult to be included
in a PPP scheme as they will probably remain purely a cost for the
Philippines government. So resources of the Philippines government
and/or Local government and support from international development
banks are the only way to finance these projects.
Slow pace of implementation of governmental infrastructure projects
under this administration.
This is mainly due to the will of the
government to fight corruption and to sanitize these public tenders that
have been tampered with irregularities in the past

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