Philippines As an Investment Destination For Infrastructure Projects

USEC. CRISTINO L. PANLILIO Vice Chairman & CEO Board of Investments

Presentation Outline
Trade and Investments Performance Outlook Creating an Attractive Environment for Investments PPP as cornerstone strategy for development The Philippine Advantage

Exports and Investments: Growing in 2010
BOI-PEZA Approved Investments; in Php billions
500
Php443.1

400
Php271.3 Php231.0

Php349.1 Php299.5

300

Php249.0

200
Php98.9

100

0 2005 2006 2007 2008 2009 Jan-Aug 2009 Jan-Aug 2010

Project Cost

Exports and Investments: Growing in 2010
Export Performance; in US$ millions
60 50 $41 3 40 30 20 10 -21 9% 0 2005 2006 2007 2008 2009 2010 Targe -30.0% 4 0% 14 9% 6 5% -2 9% $47 4 $50 5 $49 0 $38 3 $46 0 30.0% 20.0% 10.0% 0.0% -10.0% -20.0%

20 0%

Amoun in US$ Mn (lh )

Growth Rate (rh )

Robust Economic Outlook for 2010 and 2011
Actual 2009
Real DP rowth (%) 11 32 (22 3) (24 1) 17.3 5.6 $ Bn) 5.3 44.2

Targets3/ 2010 Latest 2010
50-60 35-55 15 0 20.0 18.7 8.0 3.7 49.0 - 50.0

2011
7 0-8 0 30-50 13 0 18.0 20.2 8.0 n.a. n.a.

7 9 (Jan-Jun) 4 0 ( ug) 43 5 (Mar) 34 0 (Mar) 9.1 (Jun) 6.9 (Jun) 3.3 (Jul) 49.6 (Aug)

Headline Inflation (%) Exports Imports rowth (%) 1/ rowth (%) 1/

OFW Remittances 2/ Amount ( $ Bn) rowth Rate Balance of Payments ( IR (
1/

$ Bn)

2/ Remittances

Based on Balance of Payments (BOP) concept coursed through banks 3/ Based on forecasts adopted by the Development Budget Coordination Committee (DBCC) on July 9, 2010

2010 Sectoral Targets
‡ ‡ ‡ ‡ ‡ ‡ BOI-PEZA Approved Investments: $10 B Merchandise Exports: $46 B Remittances: $19 B BPO / Call Center: $9.4 B Electronics / Semicon: $25 B Tourism: 3.3 M foreign visitors

Creating Better Business Environment
‡ Ensure ease of doing business ‡ Provide competitive investment incentives ‡ Improve infrastructure through enhanced

implementation of the Public-Private Partnership (PPP) Programs

Ensuring Ease of Doing Business
‡ ‡ ‡ ‡ Full implementation of Business Name Registration System (BNRS) Implementation of the Philippine Business Registry (PBR) Improve Business Permits and Licensing System (BPLS) at the local government level Nationwide support for National Economic Research and Business Assistance Centers (NERBAC)

Investment Facilitation Services
Due diligence assistance  Information support  Visit program development & investment briefing  Business matching Business registration facilitation  Fast tracking of applications for registration  Assistance with Local overnment Unit (L U) requirements Aftercare Service  Presence of government network to quickly respond to concerns Supervision & monitoring

The Foreign Investments Act
Special Features of FIA Allows Non-Philippine Nationals to invest in domestic or export oriented (at 60% export) activities (non-FINL) up to 100% of its capital Foreign Investment Negative List (FINL) List A ± areas of activities reserved to Philippine nationals where foreign equity participation in any activity listed therein shall be limited to a maximum of 40% as prescribed by the Constitution List B ± areas of activities where foreign ownership is limited pursuant to law for reasons of security, defense, risk to health and morals and protection of SMEs.

Competitive Investment Incentives
Fiscal
New Projects (Pioneer)-6 years New Projects (Non-Pioneer)-4 years Expansion-3 years (New & Expansion) Located in LDA-6 years Exemption from taxes and duties on imported spare parts, genetic and breeding materials

NonFiscal
Employment Of Foreign Nationals

Simplification of customs procedures

Exemption from wharfage dues and export tax, duty, impost and fees

Importation of consigned equipment

Zero-Duty on Capital Equipment, Spare parts and Accessories by virtue of EO 528

The privilege to operate a bonded manufacturing/ trading warehouse subject to customs rules and regulations

Additional Deductions from Taxable Income

PublicPublic-Private Partnerships
Cornerstone strategy of national development
‡ Reorganizing the BOT Center into the PPP Center ‡ Focus on infrastructure support facilities for tourism,

agriculture, social services and growth centers
‡ Provide incentives to stimulate private resources ‡ Ensure competition, fairness and transparency ‡ Provide assistance in preparation of business case, pre-

FS, full FS, detailed engineering, tender document, etc.
‡ Fast-track project approval process ‡ 2011 Rollout/Tender: 10 Projects ‡ 2012 & beyond: 73 projects

Public-Private Partnerships
Cornerstone strategy of national development
Project Name
MRT/LRT Expansion Program: Privatization of LRT 1 Operation & Maintenance (DOTC/LRTA) LRT Line 2: East Extension Project (DOTC/LRTA) MRT/LRT Expansion Program: Privatization of MRT 3 Operation & Maintenance (DOTC/LRTA) MRT/LRT Expansion Program: LRT 1 South Extension Project (DOTC/LRTA) New Bohol Airport Development (DOTC/MIAA/CAAP) Puerto Princesa Airport Development (DOTC/MIAA/CAAP) New Legaspi (Daraga) Airport Development (DOTC/CAAP) Privatization of Laguindingan Airport Operation &Maintenance (DOTC/MIAA/CAAP) NAIA Expressway, Phase 2 (DPWH) CALA Expressway ± Cavite Side Section (DPWH)

Project Cost
(2010 Prices in PhP Million) 7,700 11,300 6,300 70,000 7,600 7,600 3,200 1,500 10,590 11,790

Government Support to BOT Projects
Fiscal Incentives Projects costing more than P1 billion are entitled to incentives under Omnibus Investments Code (OIC) upon registration with the Board of Investments Projects costing P1 billion and below can avail incentives under OIC subject to inclusion in the current Investment Priorities Plan L Us may provide additional tax incentives, exemptions, or reliefs, subject to the provisions of the Local overnment Code and other pertinent laws

Government Support to BOT Projects
Cost-Sharing Projects with difficulty sourcing funds may be partially financed from direct government appropriations (GAA) and/or Official Development Assistance (ODA) Financing from GAA or ODA not to exceed 50% of project cost Other Government Undertakings Include credit enhancements such as take or pay, currency convertibility, etc. Direct government subsidy or equity

The Philippine Advantage
Strategic Location in Asia Available Quality Human Resources Reliable infrastructure support Hospitable Lifestyle

The Philippine Advantage
Strategically Located in Asia
Good access to the important 550 million people ASEAN market Reachable within 4 hours by plane from Asian key cities  Tokyo 4 hrs  Shanghai 3.25 hrs  Singapore 3 hrs  Taipei 2 hrs  Bangkok 3 hrs  Macau 2 hrs.  Jakarta 3.25 hrs  Kuala Lumpur - 3.5 hrs

Available Quality Human Resources
Highly educated  92.6% literacy rate, 70% fluency in English  36 million labor force  450,000 college graduates per year  40,900 IT / Computer Sciences / Engineering  98,120 Commerce / Business-related  125,000 Medical & Allied / Natural Sciences  62,000 Eng¶g & Architecture/Fine Arts English proficient Strongly customer service oriented Excellent in the practice of professions Highly trainable and with fast learning curve Adaptable to universal cultures High level of commitment and loyalty

Reliable Infrastructure Support
Super Regions Infrastructure Development Network of roads, railways, waterways & airports Invigorated Aviation Industry Fast-tracking of Port Development Connection to the world 24/7

Hospitable Lifestyle
‡ Friendly people ‡ Value-for-money housing ‡ Modern recreational facilities ‡ First-rate educational institutions ‡ Presence of international schools (e.g. Brent School, International School Manila, British School) ‡ A growing favorite tourist destination ‡ 8.7% increase in tourist arrivals (3.09 million) ‡ 41% increase in tourist spending

Thank You!

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