Asian bank seeks entry into Philippine market

AN ASIAN bank could be the first foreign lender to penetrate the Philippine market since rules allowing offshore banks’ entry were liberalized last year, according to a Bangko Sentral ng Pilipinas (BSP) official.

Central bank deputy governor Nestor A. Espenilla, Jr. told reporters yesterday that the BSP is “currently processing one application” from a foreign bank to operate in the Philippines.

“We hope to approve the first one within the first quarter,” Mr. Espenilla said on the sidelines of the Financial Executives of the Philippines’ inaugural meeting and induction ceremony held in Makati City.

The BSP official refused to divulge any information about the bank’s identity, except that it’s from Asia.

Signed into law by President Benigno S.C. Aquino III in July last year, Republic Act (RA) 10641, or An Act Allowing the Full Entry of Foreign Banks in the Philippines, amended certain parts of the two decade-old RA 7721, which sanctioned the entry of a limited number of foreign banks. 

The new law’s implementing rules and regulations were approved by the policymaking Monetary Board in November last year, and were released through BSP Circular 858.

RA 10641 states that more foreign banks -- which should be publicly listed in their home country -- could operate in the Philippines by acquiring, purchasing or owning up to 100% of the voting stock of an existing bank.

New entrants could also invest in up to 100% of the voting stock of a new banking subsidiary incorporated under the laws of the Philippines.

A third mode of entry would be through establishing branches with full banking authority.

Despite opening up the industry to more foreign players, the new law still mandates the Monetary Board to take steps in ensuring that at least 60% of the resources or assets of the entire Philippine banking system is held by domestic banks majority-owned by Filipinos.

Such measures include the suspension of entry of additional foreign bank subsidiaries and branches as well as a halt in the license upgrade or conversion to subsidiary of existing foreign bank branches.

Prior to the amendments stipulated in RA 10641, Section 6 of RA 7721 had only allowed up to 10 foreign banks to enter the Philippine market within five years from 1994, when that old law was passed.

Currently, all 10 slots are filled by: CTBC Bank (Philippines) Corp.; Maybank Philippines, Inc.; Bangkok Bank Public Co. Ltd.; Bank of America, N.A.; Bank of China Ltd. Manila Branch; Citibank, N.A.; JP Morgan Chase Bank, N.A.; Korea Exchange Bank; Mega International Commercial Bank Co., Ltd.; and the Bank of Tokyo-Mitsubishi UFJ, Ltd.

Under the old law, only when one of the 10 bank pulls out could another foreign lender enter the Philippine market. -- Daryll Edisonn D. Saclag

source:  Businessworld

World Bank unit sees 15 PPP projects as key to ASEAN connectivity

FIFTEEN public-private partnership (PPP) projects in the Philippines have been identified by the World Bank’s Singapore Infrastructure Hub as key projects for the Association of the Southeast Asian Nations’ (ASEAN) plans to improve the region’s connectivity with the rest of the world, Philippine officials said.

In a statement, the PPP Center said that the international organization -- in a forum held in the country last Dec. 16 and Dec. 17 -- identified the following PPP deals as “essential infrastructure” for realizing “the Master Plan for ASEAN connectivity:”

The P5.81-billion operations, maintenance and redevelopment of the Puerto Princesa Airport; the P30.40-billion operation and maintenance (O&M) of the Iloilo Airport; the P14.62-billion Laguindingan Airport O&M; the P4.57-billion Enhanced O&M of New Bohol (Panglao) Airport; the P5.81-billion O&M of Puerto Princesa Airport; the P40.57-billion O&M of Davao International Airport; the O&M of the Ninoy Aquino International Airport; the P8.1-billion upgrading of the San Fernando Airport; the P18.99-billion Davao Sasa Port Modernization Project; the P177.22-billion North-South Commuter Railway (South Line); LRT2 O&M contract; the P15.77-billion NLEX East Expressway;the P7.64-billion Central Luzon Link Expressway-Phase II; the P2.34-billion Improvement and O&M of Kennon Road and Marcos Highway; and the P151.78-billion Plaridel Bypass Toll Road.

The PPP Center said that these connectivity projects will “directly link the Philippines with its ASEAN neighbors and to the rest of the world.”

Once built, the PPP Center said that transportation costs are expected to be reduced, “paving way for the exchange of more goods and services. At the same time the new infrastructures would facilitate faster and better travel that could potentially boost local tourism.”

During the first ASEAN PPP Networking Forum hosted by the Philippine government last month, the country’s PPP initiative was regarded as “one of the most mature PPP programs in the region that has established several policy and process improvements and developed a robust pipeline of projects.”

ASEAN countries that are just starting with PPP programs are Cambodia, Myanmar, Laos and Vietnam, PPP Center said, adding that they have also expressed their intent for future engagements with the Philippines to learn more about the country’s experience. -- Chrisee Jalyssa V. Dela Paz

source:  Businessworld

US-Asean agri-food trade: Who is faring better?

The United States is one of the largest trade partners of the Association of Southeast Asian Nations.

In agri-food products, the total two-way trade in 2013 was $29 billion: $10.2 billion of US exports and $18.8 billion of US imports, or a US trade deficit of $8.6 billion.

This article benchmarks the trade performance of six Asean countries, namely, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam—in terms of growth in exports and trade balances between 2003 and 2013.

It also identifies the major US exports and imports.

Between 2003 and 2013, US exports to Asean-6 grew 3.8 times from $2.7 billion to $10.2 billion while its imports expanded 2.6 times from $7.2 billion to $18.8 billion.

Thus, the United States posted a trade deficit of $8.6 billion.

Who then are the Asean winners and losers? What are their main US exports and imports?

Indonesia. The United States exported $2.6 billion worth of goods to Indonesia in 2013, up from $0.7 billion in 2003. By contrast, it imported $5.4 billion in 2013 from only $1.9 billion in 2003.

The US had a trade deficit of about $2.8 billion in 2013, up from $1.2 billion in 2003.

Main Exports: milk and cream, wheat, soya beans, starch residues, animal feeds preparations

Main Imports: natural rubber and tire, frozen shrimps, coffee beans, palm oil, pepper, coconut oil, prepared crabs, prepared shrimps and cocoa butter

Malaysia. The United States exported $1 billion worth of products in 2013, up from $0.4 billion in 2003.

By contrast, imports reached $2.9 billion in 2003 from almost $1 billion in 2003.

The United States had a trade deficit with Malaysia of $0.9 billion in 2013 as compared to $0.6 billion in 2003.

Main Exports: soybeans, milk and cream, food preparations, fruits and nuts, residues from starch manufacturing

Main Imports: palm oil and fractions, coconut oil and fractions, articles of rubber, cocoa butter and powder, frozen shrimps

Philippines. In 2013, US exports to the Philippines amounted to $2.6 billion, higher than the $0.6 billion in 2003. Meanwhile, US imports reached $1.5 billion in 2013 from $0.8 billion in 2003. The US posted a trade surplus $1.1 billion in 2013 as against a $0.2-billion deficit in 2003.

Main Exports: wheat, soybean meal, milk and cream, poultry meat, pork and offal, alcoholic beverages, fruits

Main Imports: coconut oil, preserved fruits and juices, frozen fish, prepared crabs and prepared tuna.

Singapore. US shipments to Singapore, a non-agricultural country, moved up to $0.8 billion in 2013 from $0.4 billion in 2003. Meanwhile, US imports were down to only $0.1 billion from $0.2 billion during the same period. The US posted a trade surplus of $0.8 billion in 2013 as against $0.2 billion in 2003.

Main Exports: meat and offal, food preparations, articles of rubber, fruits, alcoholic beverages

Main Imports: biscuits and bread, live fish, cocoa butter and powder.

Thailand. US exports to Thailand increased to $1.3 billion in 2013 from $0.5 billion in 2003. US imports likewise went up to $5.8 billion in 2013 from $2.3 billion in 2003. The US posted a huge trade deficit of $4.5 billion in 2013, up from $1.8 billion in 2003. Thailand has the most diversified supplies to the US.

Main Exports: soybeans, wheat, brewing waste, animal feed preparations, fruits, milk and cream, frozen fish.

Main Imports: rubber, tires, articles of rubber, prepared tuna, prepared shrimp, frozen shrimp, preserved fruits, jasmine rice, pet food, food preparations, condiments and sauces, non-alcoholic beverages, pasta, biscuits, fruits and nuts.

Vietnam. US exports reached $1.8 billion in 2013, up from less than $0.1 billion in 2003. Similarly, its imports rose to $3.1 billion from $1 billion during the same period. The US posted a trade deficit of $1.3 billion in 2013 compared to $1 billion in 2003.

Main Exports: soybeans, nuts, brewer waste, soybean meal, milk and cream, peanuts

Main Imports: frozen shrimp, frozen catfish, coffee beans, pepper, cashew nuts,   prepared shrimps, canned tuna, prepared crabs, rubber and tires.

Comparisons

• The Philippines ranks first as a US market closely followed by Indonesia. The country has diversified exports but at relatively smaller values than Asean peers.

• Thailand and Indonesia are the largest US suppliers, followed by Vietnam and Malaysia. The Philippines is a far fifth.

• Thailand has the widest variety of exports, true to its name as “kitchen of the world.” This is followed by Vietnam and Indonesia.

• The US has trade deficits with Thailand, Indonesia, Malaysia and Vietnam. It has trade surpluses with the Philippines and Singapore. The trade surplus with Singapore is to be expected as it is a small island with little agriculture.

Benchmarking

The Philippines faces challenges in the US market. The level of US imports is far lower than its Asean peers, except for Singapore, a non-agricultural country. While it is third in vegetable oils, it is behind in rubber products, fresh seafood (shrimp and fish), processed seafood, coffee and many others.

Competitiveness in the global market means principally adequate supply of raw materials to package or process, and secondarily, logistics. This cuts across many industries.

Much needs to be done if the country can expand its agri-food exports, promote off-farm and non-farm jobs, and create a vibrant agro-industry.

More than ever, this country needs more resolve and problem solvers.

(The author is vice chair of the MAP Agribusiness and Countryside Development Committee, and the executive director of the Center for Food and AgriBusiness of the University of Asia & the Pacific. Feedback at <map@map.org.ph> and < rdyster@gmail.com>. For previous articles, please visit <map.org.ph>)

source:  Philippine Daily Inquirer