Investment Grade Philippines: Seizing Opportunities To Achieve Inclusive Growth

Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth
September 2013
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
I. Macroeconomic Performance and Outlook
Real Sector
Secretary Arsenio M. Balisacan National Economic and Development Authority
The Philippine Economy Sustained Robust Growth in H1 2013
2012 GDP Growth By Industrial Origin Agri, Fishery, Forestry and Hunting Industry Of which: Manufacturing Services By Expenditure Household Final Consumption Govt Final Consumption Capital Formation Of which: Fixed Capital of which: Public Construction Private Construction Durable Equipment Changes in Inventory Exports Imports
Source: National Statistical Coordination Board
H1 2012 6.4% Growth Rate 2.8 6.8 5.4 7.6 6.6 12.2 (3.2) 10.4 29.8 11.5 8.0 (333.8) 8.9 5.3 Share to GDP 10.9 32.1 22.1 57.1 69.1 11.5 15.6 19.8 1.9 5.6 10.2 (4.2) 53.0 49.0 Growth Rate 0.9 5.6 5.1 8.0 6.7 13.2 (15.7) 5.6 50.2 (4.9) 6.2 (1583.0) 10.3 3.3
H1 2013 7.6% Share to GDP 10.2 33.0 22.6 56.8 67.7 12.3 18.5 20.8 2.4 6.2 10.2 (2.3) 45.8 45.2 Growth Rate 1.4 10.6 9.9 7.1 5.3 15.3 27.3 12.7 36.2 17.4 7.9 41.2 (7.0) (0.7)
6.8% Share to GDP 11.1 32.0 22.1 56.9 70.4 10.3 18.5 20.3 1.8 6.4 10.0 (1.8) 48.4 47.6
Sound Macroeconomic Fundamentals Supported this Remarkable Performance

Low and Stable Inflation
9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 2005 2006 2007 2008 2009 2010 2011 2012 2013* 0.0 2005 2006 2007 2008 2009 2010
*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.
Favorable Interest Rate and Sound Banking System

10.0 Headline Inflation Low-end Target High-end Target 8.0 6.0 5.7 17.6 8.2 17.5 15.7
(%)
8.3 6.5 5.5 4.2 3.8 2.9 4.6 3.2 2.8
(%)
15.5 15.8 16.9
17.6
18.4
20.0 16.0
NPL Ratio, LHS Real interest rates, RHS CAR, RHS 4.4 3.6 2.0 3.7 4.8 3.5 0.2 3.0 4.2 2.9 3.7 2.1 2011 2.2 1.9 3.5 0.0 2012 12.0 8.0 4.0
4.0
Sustainable Fiscal and External Position

80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013* -3.7 -3.5 -2.6
NG Debt to GDP (LHS)
68.5
-0.2 54.7 61.4 -0.9 54.8 53.9 -1.0
0.0 -0.9 -0.5 -1.0 -1.5 -2.0 -2.5 -3.0 -3.5 -4.0
(%)
60.0 50.0 40.0 30.0 20.0 10.0 0.0 2005 2006 2007 2008 2009 1.9 2.1 52.7 44.1 4.4 37.1 4.8 31.3 32.6 5.6
Fiscal Balance to GDP (RHS)
External Debt to GDP, lhs Current Account to GDP, rhs
6.0 5.0
52.4
50.9
51.0
49.5
4.5 30.1
5.3 4.0 3.0 2.0 1.0 2.922.8
-2.0 -2.3
3.2 27.0 24.1
2010
2011
2012 2013*
* As of June 2013
* As of Q1 2013
Our Competitiveness also Increased
Global Competitiveness Index (GCI) Report

Country Singapore Malaysia Brunei Thailand Indonesia Philippines Vietnam Cambodia 2013-2014 2012-2013 2011-2012 GCI Ranking GCI Ranking GCI Ranking 2 24 26 37 38 59 70 88 2 25 28 38 50 65 75 85 2 21 28 39 46 75 65 97
Fitch Upgraded to BBB -(March 27, 2013)/ Stable
Moody's Upgraded to Ba1(July 25, 2013)/Rating under Review for Upgrade
S&P's Upgraded to BBB-(May 2, 2013)/Stable
Source: World Economic Forum
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%
Gross Domestic Product
22%
Investment/GDP ratio
6.8-7.2%
Unemployment Rate
16.6%
(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
Particularly Employment Generation
Indicator Labor Force Level (000) Employment Level (000) Wage and salary workers (% share to total employment) Unemployment Level (000) Unemployment Rate (%) Underemployment Level (000) Underemployment Rate (%)
Ave 2010 38,893 36,035 54.5 2,859 7.4 6,762 18.8
Ave 2012 40,426 37,600 57.2 2,826 7.0 7,514 20.0
Ave 2012 (Jan, Apr & Jul) 40,424 37,577 57.1 2,847 7.0 7,632 20.3
Ave 2013 (Jan, Apr & Jul) 40,972 37,978 58.6 2,994 7.3 7,509 19.8
Source: Labor Force Survey, National Statistics Office
And Poverty Reduction to Achieve Inclusive Growth

First Semester Poverty Incidence Among Population (%) 35 14.3 30 25 20 16.6 15 10 5 0
S1 2006 S1 2009
14.3 NCR, Reg III and IV
Poverty Incidence Among Population by Region 2011 (%)
28.8
28.6
27.9 12.8
8.9
64.0 2012 14.4
12.7
S1 2012 12.8
8.9
FY 2015 *
64.0
Other Luzon Visayas Mindanao
8.8
64.1
*Philippine Development Plan Target Source: National Statistical Coordination Board
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
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
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
Given these Concrete Strategies, We are Confident that Growth will Continue in 2013 and Beyond
2012 Actual GDP Growth (%) Agriculture Growth (%) Industry Growth (%) Services Growth (%) 6.8 2.8 6.8 7.6
H1 2013 Actual 7.6 1.4 10.6 7.1
2013 Target 6.0-7.0 3.5-4.5 6.4-7.5 6.3-7.3
2014 Target 6.5-7.5 3.2-4.2 7.4-8.5 6.7-7.6
Source: National Economic and Development Authority as approved by the Development Budget Coordinating Committee
13
Supported by the Following Growth Drivers
Production
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
Expenditures
14
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
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
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 percent for the overnight borrowing or reverse repurchase (RRP) facility and 5.5 percent for the overnight lending or repurchase (RP) facility. 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. Continued to champion financial learning and consumer protection.
Impact Price stability and non-inflationary growth
Strong external position and stable foreign exchange rate Efficient, sound, competitive and inclusive financial sector
18
Monetary Policy Settings Remain Supportive of Non-Inflationary Growth

Prudent monetary policy has been effective in safeguarding price stability Headline Inflation vs. Target (%) 2002- Aug 2013
12
Headline
Previous rate cuts working their way through the economy RRP Rate and Actual Lending Rate (%) Jan 2009 Aug 2013
12
10
Lower bound of target Upper bound of target
10 Aug13: YTD= 2.9%2.1% Jan-Aug 2.8% July 1313: = 2.5%
8
Jul 2013: 5.9%
4
RRP Rate Average bank lending Rate
Aug 2013: 3.5%
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
0 Jul Jul Jul Jul Jan Jan Jan Jan Jan Apr Apr Apr Apr Apr Oct Oct Oct Oct Jul
19
2009
2010
2011
2012
2013
Robust External Position Despite Lingering Global Economic and Financial Uncertainties
BOP Position and Current Account remain in surplus Balance of Payments, (US$ Million)
15000 13000 11000 9000 7000 5000 3000 1000 -1000 -3000
Balance of Payments Capital & Fin'l Account Current Account
External debt-to-GDP ratio declines significantly

Current Account: 3.4
External Debt (US$ Billion) and External Debt/GDP (%)

64
60.2
External debt in US$ billion (lhs) External debt as % of GDP (rhs)

59
70 60 50 40
24.1 22.8
62 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 Q1 2012 2013 60 58 56
83.2
14 12
Foreign exchange reserves continue to build up

90 80 70 60 50 40 30 20 10 0
2 0
Gross International Reserves, (US$ Billion)

GIR (lhs) Import Cover (rhs)
30 20 10 0
54 52 50 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 Q1 2012 2013
12.0
10 8 6 4
2004
2005
2006
2007
2008
2009
2010
2011
2012
EndAug'13
20
Sound and Stable Banking System

Bank capitalization remains above regulatory standards and international norms Capital Adequacy Ratio (Philippine Banking System)*
18 16 14 12 10
1,822
Quality of loan portfolio continues to improve Total Loans Portfolio (Php Million) and Non-performing Loans Ratio (%) (Philippine Banking System)
4500 4000 3500 3000 2500 2000 1500 1000 500 0 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)
2.5 17.1 4,192
19 2012: 18.4 18 17 16 2012: 17.3 15 14 13 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 CAR solo CAR consolidated
8 6 4 2 0
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
* 2001-2011 data is on the Philippine Banking System; available data for 2012 is on U/KBs.
21
State of Financial Inclusion in the Philippines

Expanding number of branches and ATMs Improving overall physical network of Philippine banks Number of Banking Offices and ATMs 2001 March 2013
14,000 12,000 10,000
Growth rate (%) 140 120 Growth in the number of banks 100 Growth in the number of ATMs 80 60 40 20 0
SOCOSKSARGEN Ilocos Region Davao Region Central Luzon Zamboanga Peninsula Northern Mindanao Cagayan Valley Western Visayas Eastern Visayas Central Visayas Caraga CALABARZON MIMAROPA
from 2009 to March 2013, especially in MIMAROPA and selected regions in Mindanao Regional Growth Rates (%) in the Number of Banking Offices and ATMs, 2009 March 2013
8,000 6,000 4,000 2,000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Mar'13 No. of banking offices No. of ATMs
-20 -40
22
ARMM
NCR
Bicol
CAR
BSPs Performance
ACTUAL 2012 1. Prudent monetary policy 2. Robust external position Inflation Balance of Payments (BOP) Gross International Reserves (GIR) External Debt-to-GDP ratio 3. Sound and stable financial system Capital Adequacy Ratio (CAR), consolidated basis (U/KBs) Non-Performing Loans (NPL) ratio (banking system) 3.2 percent US$9.2Bn (Jan-Dec 2012) US$83.8Bn (End-Dec 2012) 24.1 percent (End-Dec 2012) (End-2011: 26.9 percent) 18.4 percent (End-2012) (End-2011: 17.7 percent) 2.5 percent (End-2012) (End-2011: 2.9 percent) 2013 2.8 percent (Jan-Aug) US$3.7Bn (Jan-Jul 2013) US$83.2Bn (End-Aug) 22.8 percent (Q1 2013)
TARGET/ FORECAST 2013 4 1 percent US$4.4Bn
US$87.0Bn
Decreasing
n.a. n.a.
Increasing Decreasing
23
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 BSPs 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
Intensifying Efforts toward Financial Inclusion
Policy, Regulation and Supervision
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.
Financial Education and Consumer Protection
Data and Measurement
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
Financial Inclusion Advocacy
Section Title
25
Macroeconomic Outlook for 2013
Actual 2012 GDP Growth (%, 2000=100) Headline Inflation (%, 2006=100) Exports Growth (%) Based on the BPM6 concept Based on NSO data Imports Growth (%) Based on the BPM6 concept Based on NSO data OF Remittances 1/ Amount (US$ Bn) Growth Rate Current Account (US$ Bn) Balance of Payments (US$ Bn) GIR (US$ Bn)
a/ b/
Projections 2013 7.6 (H1) 2.8 (Jan-Aug) 7.9 (Q1) -3.4 (Jan-Jul) -8.2 (Q1) -3.8 (Jan-Jun) 10.7(Jan-Jun) 5.6 3.4 (Q1) 3.7 (Jan-Jul) 83.2 (end-Aug) 2013 6.0 7.0 a/ 3.0 5.0 a/ 11.0 a/
6.8 3.2 20.9 7.9 11.3 2.7 21.4 6.3 7.1 9.2 83.8
13.0 a/
22.5b/ 5.0 b/ 7.0 b/ 4.4b/ 87.0 p/
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
26
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
BSP Policy Directions
Monetary sector Sustain an appropriate monetary policy stance consistent with the BSPs 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
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 12.9% and 13.2%, respectively
2011 In Php Bn Total Revenues Tax Revenues BIR BOC Non-Tax Revenues BTr Income Expenditure Surplus / (Deficit) % of GDP Actual 1,359.9 1,202.1 924.1 265.1 157.9 75.2 1,557.7 (197.8) -2.0% Program 1,560.6 1,427.4 1,066.1 347.1 131.2 61.8 1,839.7 (279.1) -2.6%
2012 Actual 1,534.9 1,361.1 1,057.9 289.9 165.5 84.1 1,777.8 (242.8) -2.3%
Growth Rate (2012/2011) 12.9% 13.2% 14.5% 9.3% 5.5% 11.8% 14.1% 22.8%
Source: Bureau of the Treasury
30
Lower than Programmed Deficit for H1 2013

Revenues were boosted by the implementation of the Sin Tax Law
In Php Bn
2012 Jan-Jun Actual
2013 Jan-Jun Program 861.0 791.4 620.3 163.9 7.2 69.7 31.6 945.7 (84.7) Actual 839.5 746.3 593.7 145.1 7.5 93.1 49.5 890.8 (51.3)
Growth Rate (2013/2012) 10.3% 11.1% 13.9% 1.2% 8.8% 4.2% -1.4% 12.0% 49.2%
Total Revenues Tax Revenues BIR BOC Other Offices Non-Tax Revenues BTr Income Expenditure Surplus/(Deficit)
760.9 671.5 521.2 143.4 6.9 89.4 50.2 795.4 (34.4)
31
Improved Fiscal Position

through a combination of improved tax effort, reduction in interest cost and more efficient expenditure
2009 Actual Tax effort (% of GDP) BIR effort BOC effort Others Expenditure (% of GDP) Deficit (% of GDP) Interest payments (% of GDP) Interest payments (% of Expenditure) 12.2% 9.3% 2.7% 0.1% 17.7% -3.7% 3.5% 19.6%
2012 Actual 12.9% 10.0% 2.7% 0.1% 16.8% -2.3% 3.0% 17.6%
2013 Adjusted 13.5% 10.5% 2.9% 0.1% 16.7% -2.0% 2.8% 16.8%
32
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 (In Php Bn) TOBACCO ALCOHOL TOTAL
*Numbers may not add up due to rounding off
Jan - Jun 2012 14.6 11.8 26.4 2013 22.4 16.2 38.5
Growth Rate (2013/2012) 53.1% 37.3% 46.1%
Sin tax law was implemented starting January 2013
Source: Department of Finance
33
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 Fitch Moodys
Upgraded to BBB-/Stable from BB+ (May 2, 2013): INVESTMENT GRADE Upgraded to BBB-/Stable from BB+ (March 27, 2013): INVESTMENT GRADE Ba1/Rating Under Review for Upgrade (July 25, 2013)
R&I JCRA
BBB-/Positive from BBB-/Stable (August 2, 2013): INVESTMENT GRADE
Upgraded to BBB/Stable from BBB-/Positive (May 7, 2013): INVESTMENT GRADE
34
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 Bernankes May 22 Statement
300 275 250 225 200 175 150 125 100 75 50 8/6/2012 10/6/2012 12/6/2012
Fitch Upgrade S&P Upgrade Bernanke Statement Indonesia
Philippines
Thailand
2/6/2013 4/6/2013 6/6/2013
Credit Rating Philippines Thailand Indonesia

*Rating Under Review Source: S&P, Fitch, Moodys
S&P BBBBBB+ BB+
Fitch BBBBBB+ BBB-
Moodys Ba1/RUR* Baa1 Baa3
35
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
2013 Outlook
Deficit to go down to 2.0% of GDP in line with the fiscal sustainability program
In Php Bn Total Revenues % of GDP Tax Revenues % of GDP BIR BOC Other Offices Non-Tax Revenues BTr Income Privatization Expenditure Surplus/(Deficit) % of GDP
2012 Actual 1,534.9 14.5% 1,361.1 12.9% 1,057.9 289.9 13.3 165.5 84.1 8.3 1,777.8 (242.8) -2.3%
2013 Adjusted 1,745.9 14.7% 1,607.9 13.5% 1,253.7 340.0 14.2 136.0 57.7 2.0 1,983.9 (238.0) -2.0%
Growth Rate (2013/2012) 13.7%
18.1%
18.5% 17.3% 6.8% (17.8%) (31.3%) (76.0%) 11.6% (2.0%)
37
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 Adjusted 1,745.9 14.7 1,607.9 1,253.7 340.0 14.2 136.0 57.7 2.0 1,983.9 16.7 (238.0) -2.0
2014 Proposed 2,018.1 15.1 1,879.9 1,456.3 408.1 15.5 136.1 56.2 2.0 2,284.3 17.1 (266.2) -2.0
Growth Rate (2014/2013) 15.6% 16.9% 16.2% 20.0% 9.2% 0.1% -2.6% 0.0% 15.1%
11.8%
38
Prudent Liability Management

Increasing reliance on domestic financing sources and improved debt sustainability
NG Financing Program focused on increasing domestic source of funds
GG Debt/GDP ...lower than NG Debt/GDP ratio

% to GDP 60
share (in %) 100% 80% 60% 40% 20% 0% 2009 2010 2011 2012 Domestic 2013 2014 Emerging Program
30 2009
44
34
16 35
11
13
50
54.8 52.4 50.9 51.5
56
66
84 65
89
44.3
87
40
43.5 41.4 40.6
2010
NG Debt
2011
GG Debt
2012
Foreign
For 2014, we are planning a Php1.0Bn issuance offshore to reprice ROP credit after investment grade rating.
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
Source: Bureau of the Treasury, Department of Finance
39
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) (83.5) (100.8)
1.0
0.0
0.0
-100.0
Php Billion
-0.7 -1.5 -1.8 -1.3
-0.8
-1.0
% of GDP
-200.0
-2.0
-300.0 -3.1 -400.0 -4.0 -500.0 2009 2010 2011 2012 2013 BESF 2013 Revised 2014 BESF
-3.0
-4.0
-5.0
GFI Government Financial Institution LGU Local Government Unit

40
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
BIR
Other Initiatives
Anti-smuggling strategies: Port accreditation Import Mapping Audit of oil companies Trade statistics reconciliation Rolling import plan
BOC
DOF Legislative Agenda
Fiscal Incentive Rationalization Tax Incentive Management and Transparency Act (TIMTA) Customs Modernization Act Valuation Reform Act Fiscal Regime for Mining Industry
41
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 economy
GFCE Growth, Public Construction Growth and GDP Growth (in %)
40.0% 30.0% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% -40.0% -50.0%
36.2 29.8 12.2 2.1 15.3
10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0%
-39.5
2011
GFCE
Public Construction 2012
GDP 2013 S1
-8.0% -10.0%
*GFCE Governments Final Consumption Expenditure
43
NG Disbursement Performance, January to June 2013
PARTICULARS REVENUES DISBURSEMENTS CURRENT OPERATING EXPENDITURES Personnel Services Maintenance and Other Operating Exp. Subsidy Allotment to LGUs Interest Payments Tax Expenditures CAPITAL OUTLAYS Infrastructure/Other Capital Outlays Equity Capital Transfers to LGUs NET LENDING SURPLUS/DEFICIT
*Numbers may not add up due to rounding
Levels (Php Bn) H1 2012 H1 2013 Actual Actual 760.9 795.3 659.5 255.3 114.9 12.8 109.3 150.0 17.3 124.1 88.3 0.9 35.0 11.6 (34.4) 839.5 890.8 730.5 282.9 145.0 11.1 120.9 157.1 13.5 163.7 125.5 0.3 37.9 (3.4) (51.3)
2012 vs. 2013

Increase/(Decrease)
Amount 78.5 95.4 70.9 27.6 30.1 (1.7) 11.6 7.1 (3.8) 39.6 37.2 (0.6) 2.9 (15.1) (16.9)
Percent 10.3 12.0 10.8 10.8 26.2 (13.2) 10.6 4.8 (22.0) 31.9 42.2 (63.1) 8.4 (129.6) 49.2
As % of Full-Year Program 48.1 44.9 46.0 45.3 45.6 24.6 50.0 47.3 50.0 43.0 41.4 25.3 49.7 (23.7) 21.5
44
NG Fiscal Outlook, FY 2013
Stronger bias towards more productive expenditures (MOOE and CO)

Particulars REVENUES DISBURSEMENTS 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
Levels (Php Bn) 2012 2013 Actual Adjusted 1,534.9 1,777.8 1,411.0 542.6 256.7 42.1 218.6 312.8 38.1 339.3 250.8 21.3 67.2 27.4 (242.8) 1,745.9 1,983.9 1,588.4 624.4 317.9 45.0 241.8 332.2 26.9 381.0 303.4 1.3 76.3 14.5 (238.0)
Percent of GDP 2012 2013 Actual Adjusted 14.5 16.8 13.4 5.1 2.4 0.4 2.1 3.0 0.4 3.2 2.4 0.2 0.6 0.3 (2.3) 14.7 16.7 13.3 5.2 2.7 0.4 2.0 2.8 0.2 3.2 2.6 0.0 0.6 0.1 (2.0)
Growth Rate 13.7 11.6 12.6 15.1 23.8 6.8 10.6 6.2 (29.4) 12.3 21.0 (93.8) 13.5 (47.1) (2.0)
45
Major Government Spending Initiatives

Ramped-up investments for public infrastructures
Levels (Php Mn)
Particulars
2012 Actual
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 39,113 215,735
2013 GAA
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 51,043 294,708
2014 Proposed
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 85,529 399,432
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
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
Source: Department of Budget and Management * Inclusive of School Building Program
46
Major Government Spending Initiatives

Key investments for poverty reduction and equitable access to basic social services
Conditional Cash Transfer 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
K-12 Program
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)
Universal Health Care Program
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 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
Technical Vocational Education
47
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
Expenditure Management Reforms

Significant expenditure management reforms have been initiated to implement the governments commitment towards a strong and healthy fiscal position over the medium-term
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 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 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
Faster Budget Execution
Tighter Alignment with Priorities
Performance Budgeting
Transparency and Participation in the Budget Process
49
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 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
Performance Indicators
50
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

Promotion and Development of Small and Medium Industries Php750Mn Shared Service Facilities Php770Mn 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
Driven by Communities and Small Entrepreneurs Enabled by Micro Finance and NGOs Businesses Enlightened by Shared Value
51
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) 2012 Actual 2013 Adjusted 2014 Proposed 2015 Projection
1/
2016 Projection 1/
REVENUES
1,534.9
1,745.9
2,018.1
2,388.4
2,814.0
% of GDP Growth Rate

DISBURSEMENTS
14.5 12.9
1,777.8
14.7 13.7
1,983.9
15.1 15.6
2,284.3
16.1 18.4
2,685.4
16.9 17.8
3,146.1

Current Operating Expenditures
16.8 14.1
1,393.0 312.8 357.3
2/
16.7 11.6
1,558.5 332.2 410.9 299.4
17.1 15.1
1,736.5 352.7 522.9 418.2
18.1 17.6
1,895.6 383.6 766.5 601.5
18.9 17.2
2,060.1 421.1 1,062.7 834.5
Of which:
Interest Payments Capital Outlays
Of which:
Infrastructure Outlays 237.3

Net Lending DEFICIT
2.2 23.4
27.4 (242.8)
2.5 26.1
14.5 (238.0)
3.1 39.7
25.0 (266.2)
4.0 43.8
23.3 (297.0)
5.0 38.7
23.3 (332.1)
% of GDP
(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
Aquinos 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
Deeply embed reforms in the policies, systems and processes of government (including legislation and leveraging technology)
Reform Constituency
Build a strong constituency CSOs, communities, private sector, etc. to provide constant support and demand for reforms
Concrete Dividends
Ensure that reforms lead to concrete benefits to people, so that the reversal of beneficial reforms will be politically and economically costly
53
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 BOI PEZA TOTAL 2011 368.93 288.34 657.27 2012 360.35 311.95 672.30 2012 165.51 43.61 209.13 2013 201.90 83.69 285.59 % Growth 22.0 91.9 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 countrys capability to supply the much needed power requirements of domestic enterprises 44.6% or Php37.3Bn of PEZAs 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
Improved Business Environment Attracted More Investments

Robust Performance in H1 2013
BOI-PEZA Approved Investments by Industry Share in %

Administrative Support Service Activities, 2.2% Others, 3.6%
BOI-PEZA Approved Investments by Source Value in Php billion

50.0 45.0 43.6
Manufacturing, 7.0% Accommodation & Food Service Activities, 9.2%
40.0 35.0 30.0 25.0

Electricity, Gas, Steam & Air Conditioning Supply, 55.9%
20.6 20.0 15.0 10.0 5.0 0.0 9.3 6.0 2.2 1.5 1.5 7.1
Real Estate Activities, 22.2%
57
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) BOI-PEZA Approved Investments Year Value (Php Bn) 657.27 672.30 209.13 285.59 Amount of Approved Foreign Investments 218.91 282.45 38.49 91.91 % Share of Foreign Investments 33.31% 42.01% 18.40% 32.18% 138.79% 29.03% % Growth in Foreign Investments An Upward Trend in the Number of Registered Regional Operating Headquarters (ROHQ)/Regional Headquarters (RHQ) No. of Registered ROHQs/RHQs and its Growth (%) Year Number of Registered ROHQs/RHQs 20 25 37 25% 48% % Growth
2010 2011 2012
2011 2012 H1 2012 H1 2013
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 Econmico Mexicano Sociedad Annima'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
58
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. 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 (ITBPM), 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. 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.
BOI-Facilitated Investment Inbound Missions
Stronger Inflow of Inbound Delegation and Company Visits
59
Merchandise Exports Gradually Recovering

Philippine Export Performance (January to June 2013)
PHs merchandise exports heading towards a gradual recovery
PH merchandise exports amounted to US$25.59Bn in the first semester of 2013. A gradual recovery can be gleaned from the reduced level of contraction at 4.5% in the year-to-date (YTD) exports, aided substantially by the 15.6% month-on-month (MOM) growth of electronics exports in June 2013.
6.0 5.0 4.0 4.0 3.0 2.0 1.0 0.0 Jan Feb Mar Apr May Jun 1.5 1.5 1.8 1.6 1.7 2.0 2.5 4.3 3.7 2.6 2.3 4.0 3.2 2.4 2.5 4.9 4.5
H1 2013 Exports In US$ billion
Top Exports
Electronics remained PHs top export at US$10.1Bn and comprised 39.42% of total PH exports. Non-electronic exports contributed 55.3% of PHs total merchandise exports, posting US$15.5Bn and growth of 7.6%.
Top Export Markets H1 2013 In US$ billion
Total Exports
Electronics
Non-Electronics
Top Markets
Japan remained the PHs 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%).
60
Export Outlook for 2013

Export Targets: 2013 -2016*
ACTUAL** 2011 Value
(in US$ Bn)
TARGETS 2012 2013 Value

(in US$ Bn)
2014 Value
(in US$ Bn)
2015 Value
(in US$ Bn)
2016 Value
(in US$ Bn)
Growth -6.2 26.7 0.9
Value
(in US$ Bn)
Growth 7.9 4.2 6.9
Growth 15 15 15
Growth 15 10 14
Growth 15 10 14
Growth 15 10 14
Total Merchandise Total Services TOTAL EXPORTS
48.3 17.9 66.2
52.1 18.6 70.7
60 21 81
69 23 92
79 26 105
91 29 120
*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
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, Europes 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
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. 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.
Pushing for the Amendment of the Cabotage Law
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 EDCs 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
More Aggressive Export Promotion
Doing Business in Free Trade Areas (DBFTA)
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/Dcor/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).
Regional Interactive Platform for Philippine Exporters (RIPPLES)
Successful Trade Missions
Japans 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
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 agencys policy thrusts, plans, and programs. Specific priority areas composed of investment gaps identified in the roadmaps.
65
Enabling Business Environment for Global Competitiveness

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.
Philippine Business Registry (PBR) and Business Name Registration System (BNRS)
Business Permits and Licensing Systems (BPLS)
National Economic Research and Business Assistance Center (NERBAC)
66
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
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
a. MSMEs assisted
Accomplished (Jan-Jun)
35,330 141,272 Php5,791.73Mn
%
52.3 54.5 47.9
67,547 259,189 Php12,087.41Mn
b. Jobs generated c. Domestic sales
Source: Department of Trade and Industry-Regional Operations and Development Group
68
Nationwide Industry Cluster Capacity Enhancement Program (NICCE)
Performance of Pilot Industry Clusters 2012 - H1 2013
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
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
69
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 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
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. 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.
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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 Industrys First Semester 2013 Accomplishment Report
71
Empowering Consumers
Consumer Complaints Resolution (January to March 2013)
Performance
DTI
Business Establishment
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. 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 Industrys First Semester 2013 Accomplishment Report
Number % to Total Number % to Total Resolved Pending Referred / Endorsed Dismissed TOTAL 1,167 209 27 7 1,410 82.8 14.8 1.9 0.5 100.0 19,422 208 14 0 19,644 98.9 1.1 0.0 0.0 100.0
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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 rice imports
6.9 %
Average annual growth since 2010
53.9%
Average annual decline in rice importation since 2010.
18.0 MMT
volume of production in 2012
Average, 2001 -2010 Average, 2011 -2012 2010/2011 2011/2012
US$1.4 Bn
Estimated forex savings due to decrease in imports
Production Growth
2.5%
5.8%
8.1%
6.9%
palay production grew by 8.1% in 2012, the highest record since 2000
Improved rice self-sufficiency levels
Tapped international niche market for rice
94.4%
On-track
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
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Midterm Milestones
Posted record harvests in corn
Regenerated fishery resources

Average fish catch of a commercial purse seiner: Before closed season: After closed season:
Average annual growth since 2010
7.8 %
7.4 MMT
volume of production in 2012
Average, 2001-2010 Average, 2011-2012 2010/2011 2011/2012
<1 MT
For every 1 kg of sardines left to spawn, be gained after the closed season .
5 MT
27 kilos would
Based on results of the 3-month closed season in East Sulu Sea, Basilan Strait, and Sibuguey Bay.
Production Growth
3.9%
9.3%
6.2%
7.8%
Corn production posted a record growth of 11.4% in the 2013 Q1
Source: Bureau of Agricultural Statistics, National Economic and Development Authority (2013)
Improved productivity in major commodities

Yield (mt/ha) of various commodities, 2010-2012 Commodity Rice White Corn Yellow Corn Coconut Pineapple Banana Sugarcane Baseline, 2010 3.62 1.62 3.63 0.80 37.37 20.19 49.85 Ave., 2011 2012 3.76 1.67 3.96 0.84 39.75 20.36 62.94
Maintained disease-free status
FMD-free without vaccination

certified by the Office International des Epizooties - World Animal Health Organization in May 2011
Avian flu-free
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Midterm Milestones
Maintainedstable stable food prices Maintained 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
3% to 5%
Farm-to-Market Roads
839.4 km
better quality, concreted FMRs constructed/rehabilitated
2011
2012
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
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Agriculture and Fisheries Performance

First Semester of 2013 GVA grew by 1.3% for H1 2013 1
Highlights
The A&F sector accounts for 10 .2% of the Philippine economy ( H1 2013, NSCB ) It employs 30 .4 % of the total labor force, or about 11.6Mn workers ( January 2013 round, BAS ) Its total agricultural exports revenue amounted to around $1.6B, higher by 41 .5% the same period in 2010 ( Q1 2013 , BAS ) Top Industry Performers in terms of 2013 H1 GVA growth are as follows :
The agriculture and fisheries sector

Value (million Php)
Gross Value Added in Agriculture and Fisheries H1 2013, at constant 2000 prices
200,000 180,000 160,000 140,000 120,000 100,000 80,000
0.5%
4.6%
60,000 40,000 20,000 0 Crops Livestock Poultry Fisheries
Mango Fisheries Poultry Pineapple
6.6% 4.6% 4.2% 3.6% 2.1%
2.1%
4.2%
H1 2012 H1 2013
Livestock
Fisheries subsector rebounded to 4.6%, up from -3.1% 2 the same period in 2012 ( H1 2013, NSCB )
Source: National Statistical Coordination Board 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
1 2
77
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 Roundscad Yellowfin Tuna Crops Subsector Tobacco 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% 30.28% 24.46% 13.98%
Source: Bureau of Agricultural Statistics 2013
78
Department of Agriculture Accomplishments

Irrigation Network Services
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 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 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
Farm-to-Market Roads Development
Agricultural and Fishery Equipment and Facilities Support Services
Production Support Services
79
Department of Agriculture Accomplishments

Marketing Support Services
Facilitated establishment of 5 trading post/ centers Established 57 food terminals Facilitated 33 Livestock Auction Markets (LAMs) 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. 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
Extension Support, Education and Training Services
Research and Development Credit Facilitation Services
Regulatory Services
Policy and Planning Services
80
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 AF GVA increased (%) Crops Livestock Poultry Fisheries 3.5-4.5 4.5-5.5 1.2-2.2 4.2-5.2 1.5-3.0 2014 3.2-4.2 4.0-5.0 1.2-2.5 4.2-5.2 1.5-2.5 2015 3.3-4.3 3.8-4.8 1.5-3.0 4.2-5.2 2.3-3.0 2016 3.5-4.5 4.0-5.0 1.6-3.5 4.2-5.2 3.8-2.5
(or lower)
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
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
83
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
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
Increase Agriculture and Fisheries Climate Resiliency

In 2012, the Philippines adopted the APEC-initiated Adaptation and Mitigation Initiative in Agriculture (AMIA) as the DAs 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
Focus Agro-Industries for Inclusive Growth

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
Focus Agro-Industries for Inclusive Growth

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
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 promotion of the tourism industry, both domestic and international, in coordination with its attached agencies and other government instrumentalities Instill in Filipinos the tourism industrys fundamental importance in the generation of employment, investment and foreign exchange
90
International Visitor Arrivals
RANK
COUNTRY
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%
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
Source: Arrival/Departure Cards and Shipping Manifests
91
International Visitor Arrivals 2013 per Month
500,000
18.0%
15.5%
450,000
2012
2013
Percentage Change, RHS
436,079 411,064 361,925
418,108 375,083
417,392
400,000 350,000 300,000
12.5%
377,879 349,779 321,930 362,062
14.0%
369,073 323,725
16.0%
14.0%
12.0%
11.3%
250,000
10.0%
8.0% 200,000 150,000 100,000 50,000 Jan Feb Mar Apr May Jun 4.0%
6.1%
8.0%
6.0%
2.0%
0.0%
92
Visitor Receipts (in US$ Million)
12,000.0
CAGR = 29.6%
10,000.0 8,297.7 8,000.0
10,774.6
CAGR = 5.2%
6,000.0 4,864.0 4,000.0 2,994.0 2,428.7 2,000.0 2,236.0 2,490.2 3,817.8
6,391.4
0.0 2008 2009 2010 ACTUAL

*CAGR cumulative average growth rate
2011
2012
2013
2014
2015
2016
PROJECTED
93
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

(NTDP 2011 2016 Strategic Directions)
Product Portfolio
Nature Tourism MICE & Events Tourism
Cultural Tourism
Health,Wellness, and Retirement Tourism Cruise and Nautical Tourism Diving & Marine Sports Tourism
Sun and Beach Tourism
Leisure and Entertainment Tourism
Education Tourism
95

PRODUCT MARKET STRATEGIES PRESENT Market Penetration PRESENT NEW Product Development
MARKETS
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 Market Development Aggressive promotion strategies targeted to Australia, Singapore, Malaysia, Canada markets to increase the number of overnight visitors. Niche Strategy Diversification Product development and diversification strategies to increase the average tourist length of stay. Secondary Strategy
NEW
96
2. Improve market access, connectivity and destination infrastructure

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
Air Seat Entitlements and Utilization 2012

MARKETS Korea Japan China Taiwan Australia Singapore Hong Kong Canada Malaysia United Kingdom Germany India Indonesia Thailand Vietnam 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 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
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
% 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%
TOTAL
10,246,964 10,042,964
5,807,674
56.68%
4,167,696
41.50%
98
Volume of Flights, Passengers and Visitors per International Airport

January June (2012 2013)
2012
2013
International Airports Manila Kalibo Cebu Clark Davao Iloilo
% 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
Room Capacity 2012

New Major Accommodation Facilities in 2012
Destinations Northern PH NCR Central Luzon Other Regions Central PH Western Visayas Central Visayas Other Regions Southern PH Northern Mindanao Southern Mindanao Other Regions Total PH
Available Room 71,804 31,790 15,024 24,990 61,978 15,200 27,447 19,331 28,922 8,113 9,613 11,196 162,704
Number of Establishments 2,248 320 489 1,439 3,220 635 1,306 1,279 1,405 380 404 621 6,873
Fairmont Hotel and Raffles Suites Quest Hotels & Conference Ctr Cebu Calyx Center Cebu Bellevue Resort Bohol Tunes Hotel Cebu Luxent Hotel Quezon City Dohera Hotel Cebu Microtel Accropolis Quezon City
100
Room Projection from 2013 to 2016

Destination Clusters Island Grouping Northern PH Central PH Southern PH Total PH
Critical Cluster Destinations Metro Manila & CALABARZON Central Visayas Bicol Cordillera
Room Supply (Available + Pipeline) Available in 2012 71,804 61,978 28,922 162,704
Room Demand 54,818 41,402 15,804 9,851
In the Pipeline 8,206 5,129 1,686 15,021
Room Gap In Critical Destination Clusters 16,025 20,757 570 37,352

Room Gap 10,177 11,831 7,125 2,890
Manila will still need the most rooms between now and 2016 Key demand cities outside of Manila are: Cebu, Panglao, Bicol, Cordillera Current accommodation development in the pipeline covers only 40% of room requirement
Available Room 37,311 27,447 8,549 6,855
In the Pipeline 7,330 2,124 130 106
101

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

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
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
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
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 Kalikasans Green Initiative, a joint program involving the government, media and academe.
106
Targets, 2013 - 2016
INDICATORS International Tourists Visitor Arrivals (Mn) Length of Stay (nights) Average Daily Expenditure (Php) Visitor Receipts (Php Bn) Domestic Tourists Domestic Travellers (Mn) Domestic Trips (Mn) Length of Stay (nights) Average Daily Expenditure (Php) Domestic Receipts (Php Bn)
2013
2014
2015
2016
5.5 8.0 4,914.0 205.4
6.8 8.0 5,431.0 269.9
8.2 8.0 5, 939.0 350.4
10.0 8.0 6,470.0 455.0
44.1 176.2 4.7 2,580.0 1,298.6
47.7 191.0 4.7 2,593.0 1,409.2
51.7 206.9 4.7 2,739 1,607.1
56.1 224.2 4.7 2,922 1,852.1
107
Economic Impact Projection 2013 - 2016
INDICATORS Gross Domestic Product Total Visitor Receipts (Php Bn) Tourism GVA (Php Bn) Share to GDP (%)
2013
2014
2015
2016
1,504.0 748.3 6.7
1,679.1 835.4 7.0
1,957.5 974.0 7.8
2,307.1 1,147.9 8.7
Employment Tourism Employment (Mn) Share to National Employment (%) 4.9 13.0 5.4 14.2 6.3 16.2 7.4 18.8
108
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 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
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
Luzon Supply-Demand Outlook 2013-2020
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
Megawatts
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
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
Megawatts
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
Mindanao Supply-Demand Outlook 2013-2020
On Available Capacity: 2013: Projected Deficit of 50 to 110MW 2014: Projected Deficit of 50 to 190MW 2015: Projected Deficit of 120 to 280MW
Megawatts
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
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
Megawatts
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
Interventions on the Mindanao Supply Situation
Recommendations Operate Illigan Diesel Power Plant (IDPP) Interruptible Load Program (ILP)
Status Currently running at 60MW and scheduled to be in full operations by October 2013 at 98MW 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 Lights petition, large customers will be encouraged to join. 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 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 Appointed Investment Officers to facilitate the processing of applications, permits and licenses of energy investors. Proposed conduct of consultations is by September 2013
Interim Mindanao Electricity Market (IMEM) Modular Genset Scheme
Creation of One-Stop Shop Develop Mindanao Energy Plan (MEP)
117
Interventions on the Mindanao Supply Situation
Recommendations Privatization of Power Barge 101-104 Balo-I Flood Control Project Indicative bidding is by Q3 2013
Status
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 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. NPC is flushing bottom sluice gates to minimize water spillage during rainy season and to address sediment buildup Under discussion of Joint Congressional Power Committee (JCPC) Feasibility Study was completed in March 2013. The target project completion is by 2018
Agus 6 Unit 1 & 2 Uprating Project
Reservoir Management of Pulangi IV
Privatization of Agus-Pulangi Complexes Visayas-Mindanao Interconnection Project
118
Indigenous Fossil Fuel Development
Production Unit 2011 2012 H1 2013
No. of Contracts Supervised/Monitored
Gas
Bn Cubic Feet
140.4
137.77
67.92 26
Condensate
Mn Barrels
5.1
4.75
2.32
Coal
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
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) For Conversion Resource No. of Projects Hydro Wind Solar Biomass 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 51 9 11 10 81 Capacity (MW) 504.2 548.5 160 76.7 1,289.4 With Certificate of Confirmation of Commerciality No. of Projects 6 5 3 1 15 Capacity (MW) 47.6 339.5 80 1.1 468.2
120
Promoted Energy Efficiency and Conservation (EE&C)
Actual Savings (in MMBFOE) National EE&C Programs 2010 Information, Education and Communication Campaign Voluntary Agreements Energy Standards and Labeling Government Energy Management Program (GEMP) Energy Management Program Phil. Energy Efficiency Project Total Savings Deferred Capacity Addition (MW) MMBFOE Million Barrels of Fuel Oil Equivalent 3.45 3.60 14.27 0.22 3.26 24.80 1,104 2011 4.56 3.24 15.3 0.28 3.80 0.29 27.48 1,222 2012 4.16 3.41 18.37 0.26 3.43 0.50 30.13 1,341
121
Household Electrification Program (HEP)
HEP is an ongoing program providing electricity to households

Year 2010 2012 (1st Batch) 2012 (2nd Batch) 2013 (1st Half) Total Luzon 648 2,308 750 2,136 5,842 Visayas 167 1,864 435 1,702 4,168 Mindanao 1,935 2,288 2,215 3,062 9,500 Total 2,750 6,460 3,400 6,900 19,510
122
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
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
High Impact Solar Projects
Type of Private Schools* College/University High School Elementary Total
Number of Schools 587 5,299 10,170 10,056
Capacity (MW)* 59 530 1,017 1,606
* Maximum capacity for distributed generation is 100 kWp/installation
Scheme: DOE to bid out for the installation, operation and maintenance Commercial Cost of Electricity must be lower than the prevailing consumer price by Php2.00/kWh
125
High Impact Hydro Projects
No. of Electric Cooperatives 78
Potential 2,066MW
Cost (Php Bn) 310
Scheme: DOE to validate potential hydropower sites and match with supply requirement of Rural Electric Cooperatives (RECs). PNOC-Renewables Corporation (PNOC-RC) to do the Feasibility Study and Detailed Engineering Design while development, construction and installation will be a partnership among PNOC-RC, Electric Cooperatives and private sector. Joint Venture Agreement (JVA) = 50% Rural Electric Cooperative Up to 10% PNOC-RC Up to 40% Private Investment Secured Power Sales Agreement /Electricity Sales Agreement between RECs and JVA
126
Road Transport and Flood Management
Secretary Rogelio L. Singson Department of Public Works and Highways
127
Status of Philippine Road Network

Improved Road Condition
Legend Road Classification National Arterial National Secondary
215,088 kms 31,598 kms 0.72 km/sq. km 0.26 km/sq. km 0.27 0.80
Total Overall Road Network Total National Road Length Road Density Paved Road Density Overall Paved Road Ratio Paved Road Ratio for Natl. Roads
128
Better Infrastructure is Improving Countrys Competitiveness

Better quality roads are being noticed
Quality of Roads
1 = extremely underdeveloped; 7 = extensive and efficient by international standards
6.0 5.0 4.0 3.0 2.0 1.0 0.0 Malaysia
2010-2011
2011-2012
2012-2013
2013-2014
Thailand
Indonesia
Vietnam
Philippines
Ranking of the Philippines significantly improved from no. 114 (2010-2011) to no. 87 (2013-2014) in the quality of roads indicator in the WEF Global Competitiveness Index
129
DPWH Strategic Policies and Programs

Mandated to plan, design, construct, and maintain national roads, bridges, and flood control systems in major and principal rivers, DPWH aims to improve service delivery through good governance reforms and collaborative program with other agencies
Good Governance Reform and AntiCorruption Program Reforms in processes promoting right project, right cost, right quality, and right-on-time implementation with the right people Competitive and transparent bidding resulted in Php18.4 billion savings from July 2010-June 2013 . Promotional examination for Asst District Engineers & up Adopt new standards for concrete pavement thickness Outsource to private sector project inspection and quality assurance Develop new construction design standards and specifications Adopt River Basin Approach to Flood Management and Water Resource Utilization Adopt Integrated Water Resource Management Approach in Coordination with Department of Agriculture, National Irrigation Authority, Department of Environment and Natural Resources, and National Water Resources Board Implement the Flood Management Master Plan for Metro Manila and surrounding Areas Upgrade access roads to designated Tourism Destinations based on the Tourism Master Plan Upgrade access to major airports, seaports and RORO ports Upgrade access to agrarian reform community & DA production areas & DTI industrial zones Prioritize Conditional Cash Transfer (CCT) Beneficiaries for labor employment on DPWH Projects Implement the High Standard Highway Master Plan for Metro Manila and 200km radius which identified priority expressways and high standard highways Develop long term road maintenance program for national roads and bridges Implement PPP Bridge Program Assist Department of Education in developing PPP School Building Program
Better Quality and Safer National Roads and Bridges Program
Effective Flood Control Program
Strategic Convergence Program
Public Private Partnership Program
130
DPWH Strategic Convergence Program

Aligning our work to support governments infrastructure program
Tourism Convergence Program
Infrastructure support to designated strategic Tourism Destinations A total amount of Php25.34Bn was released from FY 2011-FY 2013 for the initial 202 identified tourism infrastructure projects. Of the Php25.34Bn, Php16.44Bn were funded under the DOTDPWH Convergence Program, while the remaining Php8.90Bn were releases from other DPWH programs. An additional amount of Php14.25Bn is included in the proposed DPWH FY 2014 Budget. Farm to Market Roads to access food production and processing sites Water impounding projects to optimize water resources for irrigation and flood management
Convergence for AgriInfrastructure
Flood Management Program
Implement priority projects under the Flood Management Master Plan for Metro Manila and surrounding areas Implementing 416 projects worth Php6.22Bn (funded under FY 2010-FY 2013 Infrastructure Program) in Metro Manila to improve the carrying capacity of the waterways and drainage channels in addition to the Php3.02Bn (part of Php5Bn) for High Impact Flood Control Projects
Integrated Transport System
Support for access to major airports, seaports and RORO ports Infrastructure support in preparation for APEC 2015 by improving access to designated airports, convention sites, tourism destinations
131
Performance (2012 vs. 20131/)

Continue to fine tune disbursement mechanisms to improve service delivery
FY 2012 vs. FY 2013 Fund Utilization (Jan-June)

250.0 200.0 150.0 100.0 50.0 0.0 Allotments 2012 (Jan-Jun) 2013 (Jan-Jun) Increase (%) 166.3 195.6 Php29.3Bn (18%) Obligations 107.0 121.9 Php14.9Bn (14%) Disbursements (NCA, TRA, FC, FNC) 64.7 81.3 Php16.6Bn (26%) Obligations vs. Allotments
In Php billion
2012 64% 2013 62%
Allotment - Authorization issued by DBM to an agency, through Agency Budget Matrix (ABM) or Special Allotment Release Order (SARO), which allows the latter to incur obligation for specified amounts contained in a legislative appropriation. Obligation-Liabilities legally incurred and committed to be paid for by the government either immediately or in the future. Disbursement- Settlement of government obligations and/or accounts payable by cash; movement of cash from the BTr or from an authorized disbursing officer to the final recipient. Disbursement is synonymous with liquidation /settlement/payment of an obligation.
1/ as of June 30, 2013 Note: NCA-Notice of Cash Allocation; TRA-Tax Remittance Advice; FC-Forex Cash; FNC-Forex Non-Cash
132
DPWH Infrastructure Program

Economic growth will receive a big push through increased infrastructure spending
2005-2014 DPWH Capital Outlays

(In Php billion)
FY 2013 vs. FY 2014 Budgets

(In Php billion)
200.0 180.0 160.0 140.0 120.0 100.0 80.0 60.0 40.0 20.0 2005 2007 2008 2009 2010 2011 2012 2013 2014
With PDAF (Pork Barrel)
Since 2011, PDAF no longer included in DPWH budget for Capital Outlay
FAPs Foreign Assisted Projects LFPs Locally Funded Projects MVUC Motor Vehicle Users Charge RLIP Retirement and Life Insurance Premiums
133
DPWH Infrastructure Program

Economic growth will receive a big push through increased infrastructure spending
FY 2013 vs. FY 2014 Regional Allocation (In Php billion)

Region FY 2013 (Based on GAA) Amount National Capital Region Highways 70%, Northern Luzon P100.93 B* Southern Luzon Visayas Mindanao Main ARMM Sub-Total: Nationwide/Central Office Total: 15.86 24.41 20.75 19.42 27.59 25.19 2.40 108.03 36.31 144.34 100% (%) 15% 23% 19% 18% 26% FY 2014 (Based on NEP) Amount 22.38 26.36 28.37 24.76 34.29 31.44 2.85 136.16 48.70 184.86 100% (%) 16% 19% 21% 18% 25%
Proposed FY 2014 Budget (Capital Outlays) (In Php billion)

Public Private Feasibility Partnership Studies/Prelim 2.7% Detailed Eng. 1.6%
3.01
4.98
12.48
Others (Water Supply, various infra incl. local projects, etc.) 6.8%
2.82
Right of Way/Contractual Obligations 1.5%
33.36
Flood Control 18.0%
128.22
Highways 69.4% (P 128.22
B) *
GAA General Appropriations Act NEP National Expenditure Program
* Note: The Php128.22Bn for Highways includes Php14.25Bn allocated for Tourism Infrastructure Projects
134
DPWH Proposed FY 2014 Budget

Proposed budget will improve infrastructure facilities across regions
2014 Regional Allocation
NCR Php22.383 (16.4%)
(In Php billion)
NORTHERN LUZON-Php26.356 (19.4%) CAR Php6.476 Region I Php5.287
SOUTHERN LUZON-Php28.373 (20.8%) Region II Php5.340 Region IV-A Php11.407 Region III Php9.252 Region IV-B Php7.587 Region V Php9.378 VISAYAS Php24.756 (18.2%) Region VI Php11.203 Region VII Php7.078 Region VIII Php6.475 MINDANAO Php34.292 (25.2%) Region XIII Php5.490 Region X Php9.374 Region IX Php5.072 Region XI Php7.391 Region XII Php4.111
TOTAL : Php136.160Bn
ARMM(IX, X, XII) Php2.852
135
Infrastructure Support Program for Mindanao

Helping unleash Mindanaos growth potential by accelerating provision of better infrastructure facilities
FY 2011-FY 2014 Annual Infrastructure Program for Mindanao In Php billion Php34.29 Php27.59 Php19.96 Php13.99* Php2.10 Php1.21 Php0.62 Infrastructure Support Program for ARMM In Php billion
TOTAL : Php95.83
ARMM Main
TOTAL : Php8.78 ** Php2.34
Php2.51
* Excludes the Php2.85Bn under the Transition Investment Support Program (TISP)-ARMM
** Total cost includes TISP-ARMM, SFD-MRIP and other projects funded from FY 2011 to FY 2013
Name of Project Basilan Circumferential Road Lake Lanao Circumferential Road Cotabato East Diversion Road
Cost (Php Bn) Php1.567 Php0.767 Php0.709
Length 50.60 km 29.88 km 13.27 km
Completion Date December 2014 February 2015 May 2014
Status On-going, 52% On-going, 2% On-going, 29%
136
Proposed High Standard Highway Network in Metro Manila and its 200km Sphere
ON-GOING : 119.74 km
Project Name Tarlac-Pangasinan-La Union Expressway Daang Hari-SLEx Link STAR, Lipa Batangas , Phase II NAIA Expressway Length (km) 88.85 4.00 19.74 7.15 Proj. Cost (Php Bn) 11.59 2.01 2.32 15.52 Completion 2016 2014 2015 2015
NEDA BOARD APPROVED: 91.20 km

Project Name NLEx-SLEx Connector Road (MPTDC) CALA Expressway (Cavite and Laguna Side) Central Luzon Link Expressway (CLLEx), Phase I Length (km) 13.50 47.00 30.70 Proj. Cost (Php Bn) 25.56 35.43 14.94 Completion 2017 2018 2017
PROPOSED (PRIORITY): 117.82 km

Project Name C-6 Expressway and Global Link (South Section) C-6 Extension (Flood Control Dike Expressway) Calamba-Los Baos Expressway Length (km) 59.50 43.60 14.72 Proj. Cost (Php Bn) 44.59 42.38 10.38 Completion 2017 2017 2017
137
Airports, Seaports and Mass Transport Systems
Secretary Joseph Emilio Aguinaldo Abaya Department of Transportation and Communications
138
138
2013 Performance vs. Philippine Development Plan Targets

PDP Target Supporting Projects 1. Establish an integrated and coordinated transport network for passengers and cargo Interconnect mass transport systems Keep mass transport convenient Integrated Transport System - Development of intermodal bus terminal facilities for provincial buses North Terminal undergoing Feasibility Study; South Terminals for NEDA Board approval Automatic Fare Collection System - Replacement of ticketing system on LRT 1, LRT 2, MRT 3 (Php1.7Bn) bidding ongoing, submission within Oct 2013 Common Station - establishment of station to connect LRT Line 1 and MRT Line 3 (Php1.4Bn) for NEDA Board approval Extension of existing rail lines LRT Line 1 Cavite Extension - Construction of 11.7km of rail to connect Baclaran to Niog in Bacoor, Cavite (Php60.63Bn) for rebid LRT Line 2 East Extension (to Masinag) - Construction of 4.19km of rail from Santolan terminal station to Masinag, Antipolo (Php9.76Bn) bids for detailed design under evaluation, construction to start Q1 2014 MRT Line 3 Capacity Expansion - Addition of 48 coaches to increase system capacity (Php4.5Bn) Procurement of additional trains undergoing post-qualification Development of new mass transit systems MRT Line 7- Construction and operation of a 22km MRT system connecting Trinoma along EDSA and North Avenue to San Jose, Bulacan for NEDA Board approval Cebu Bus Rapid Transit (BRT) - Development of BRT on a 23km corridor with 33 stations, from Bulacao to Talamban Detailed design contract for award; project for presentation to NEDA Board
139
2013 Performance vs. Philippine Development Plan Targets

PDP Target Supporting Projects 2. Bolster tourism targets through the construction and reinforcement of transport infrastructure Develop airports Promote PPPs Promote safety Promotion of PPPs: Mactan-Cebu International Airport - construction of new terminal building to accommodate 3.5Mn pax/year bidding ongoing, submission within Oct 2013 O&M/expansion of Laguindingan and New Bohol Airports for submission to NEDA Development of new airports: New Bohol Airport - development of new airport at Panglao Island to replace Tagbilaran Airport (Php7.1Bn) construction supervision bidding ongoing Bicol International Airport - development of new airport at Brgy. Alobo to replace Legazpi Airport (Php4.8Bn) contract for consultancy services (passenger terminal detailed design; construction supervision) for award Improvement of the following airports: Puerto Princesa Airport - new terminal; upgrade of runway and navigational aids (Php4.5Bn) bidding ongoing for detailed design and construction Tacloban Airport - new terminal, apron, taxiway, and parking (Php2.12Bn) construction for bidding, airside civil works ongoing NAIA T1 rehabilitation; T3 completion of structural works Bidding ongoing for night-rating of Tuguegarao, Busuanga, Roxas, Dumaguete, Dipolog, Ozamiz, Cotabato, and Butuan New Communications and Navigation Surveillance and Air Traffic Management system (Php10.9Bn) project resumed, to be completed Q4 2015 Promotion of dual airport system Resolution of ICAO significant safety concerns Partial lifting of EU ban on Philippine carriers
140
Outlook for 2014

2014 Infrastructure Proposal Locally-Funded Projects Airports and Navigational Facilities Bicol International Airport Laguindingan Airport Ports DOTC Road Transport IT Infrastructure MRT 3 Capacity Expansion MRT 3 Operation s & Maintenance MRT 3 Subsidy Transport Studies Fund DOTC - Executive Management Information Systems Project Development Funds for PPP Transport Infrastructure Projects: Mactan Cebu Airport Expansion, Integrated Transport System (ITS) North and South Terminals (2 south terminals); Central Spine RORO; Davao Sasa Port APEC Hosting Infrastructure Requirements for Clark, Davao, Iloilo and Kalibo Airports; for Caticlan and Cagban Jetty Ports Puerto Princesa Airport New Bohol Airport LRT Line 1 Cavite Extension LRT Line 2 East Extension Cebu Bus Rapid Transit (BRT) System Maritime Disaster Response Helicopter Acquisition Multi-Role Response Vessel Acquisition
Foreign Assisted Projects
141
2014 Policy Thrusts and Other Plans/Projects

Policy Thrusts and Other Plans/Projects Supporting Projects
1. Establish an integrated and coordinated transport network for passengers and cargo Make mass transport available from origin to destination Interconnect mass transport systems Keep mass transport convenient and cheap Coordinate transport planning with land use and urban planning Improve transport linkages and efficiency to link production and consumption markets Push for approval of the National Transport Policy Feasibility study ongoing for Integrated Luzon Railways, to be completed Q1 2014 Feasibility study ongoing for Manila-Malolos commuter line Project development of mass transit systems Extensions for LRT Line 1 (Bacoor to Dasmarias, Cavite), LRT Line 2 (Recto to Baseco Compound), and MRT 3 (Taft to Entertainment City) Mass transit system to connect cities of Manila, Makati, Pasay, and Taguig New bus lines along Ortigas, C5, and R7 Manila Bay-Pasig River-Laguna Lake Ferry System Improvement of PNR commuter service Development of Central Spine Roll-On Roll-Off for additional connectivity for transport of cargo Rehabilitation of Davao Sasa Port Identification of policies and regulations (e.g., Promotion of Batangas Port, Cabotage Law Amendment, Shipping Cost Reduction, Transit Corridor Management Franchise Bidding)
142
2014 Policy Thrusts and Other Plans/Projects

Policy Thrusts and Other Plans/Projects Supporting Projects
2. Bolster tourism targets through the construction and reinforcement of transport infrastructure Develop airports Open secondary airports to international traffic Improve access to airports Promote PPPs Privatization of operations/maintenance/expansion of Puerto Princesa, Iloilo, Davao, and Bacolod Airports for feasibility study Development of new tourism airports: Siargao, Camarines Sur, Busuanga Improvement of current airport facilities: NAIA, Clark International, Butuan, Cotabato, Dipolog, Pagadian, and Pinamalayan
143
Public-Private Partnership
Executive Director Cosette V. Canilao Public-Private Partnership Center
144
144
Actual Performance
Projects Awarded
3 Projects Successfully Awarded PROJECT Daang Hari-SLEX Link Road Project PPP for School Infrastructure Project (Phase I) EST. COST (Php Bn) 2.01 PPP STRUCTURE Build-TransferOperate (BTO) STATUS PRIVATE PARTNERS
Construction ongoing Ayala Corporation Target Completion: June 2014 Notices to Proceed issued to 3,498 classrooms; Ongoing construction of 2,617 classrooms; On-going preparation of detailed engineering design; procurement of independent consultant; and acquisition of right of way Bright Future Educational Facilities, Inc. Citicore Holdings Investment, Inc.Megawide Construction Corporation Inc.
16.28
Build-LeaseTransfer (BLT)
NAIA Expressway Phase II
15.52
Build-TransferOperate (BTO)
Vertex Tollways Devt. Inc.
145
Actual Performance
Projects with Live Bidding
7 National Projects with Live Bidding EST. COST (Php Bn) 5.69 8.8 1.72 17 35.42 59.2 1.16
PROJECT Modernization of the Philippine Orthopedic Center PPP for School Infrastructure Project Phase II Automated Fare Collection System Mactan-Cebu Intl. Airport New Passenger Terminal Building Cavite-Laguna Expressway Project LRT Line 1 Cavite Extension and Operation & Maintenance Rehabilitation, Operation & Maintenance of the AHEPP Auxiliary Turbines 4 & 5
STATUS For ICC Approval of Bid For financial bid opening on 2 September 2013 Finalization of bid documents Finalization of bid documents For prequalification of bidders For re-bidding For re-bidding
146
PPP Performance in Other Key Result Areas

Capacity development and enhanced legal and regulatory framework
PPP Capacity Building Program for Implementing Agencies
PPP Core Courses Programmed training interventions for select national government agencies, local government units, and government-owned and controlled corporations (Roll-out of Phases 1-3)
Enhanced Legal and Regulatory Frameworks

Executive Order No. 136 (series of 2013) Provides for the creation of the PPP GOVERNING BOARD which shall be the overall policy-making body of all PPP-related matters, including the Project Development and Monitoring Fund (PDMF); shall provide strategic direction for the PPP Program Enhances the PDMF fund to support implementing agencies in the conduct of preinvestment studies, and project monitoring (i.e. hiring of independent consultants for monitoring)
Knowledge Sharing Series Discussion sessions on topics relevant to PPP implementation (e.g. Public Housing PPPs, Gender Analysis in PPPs, PPP Procurement Issues, and PPP Contract Structure)
Learning Series Highly specialized technical courses focusing on specific PPP topics (e.g. Financial Modelling and Analysis, Financial Valuation, etc.)
NEDA Joint Venture Guidelines Provides clear and detailed provisions on the approval of joint venture proposals, including possible forms of performance security that a government entity should require
PPP Manual for National Government Agencies A manual envisioned to guide national government agencies on the step-by-step process in undertaking PPPs
147
Prospects for 2013-2014

PPP Program Outlook for 2013-2014 Projects in the pipeline to move forward to more advanced stages of the PPP project cycle Adequate monitoring and management of projects during development and implementation Sustaining the PPP momentum by enhancing the legal and regulatory frameworks governing PPPs Efficient management of contingent liabilities with a growing PPP portfolio through the creation of a Contingent Liability Fund Strengthen capacities of local government units through the LGU PPP strategy Enhancement of PPP knowledge management systems
148
Policy Thrusts and Other Projects for 2013-2014

Policy Enhancements, Improving Capacities and PPP Projects for 2013-2014
Policy Enhancements
Improving Capacities
Amendments to the BOT Law (PPP Act) Revised Framework for Financing National Government Projects Drafting of the IRR for the EO on Alternative Dispute Resolution Sector-specific Policy Guidelines on PPP Policy Guidelines on Monitoring and Evaluation Policy Guidelines on Contract Management
Utilization of the PDMF fund for the development of a bankable pipeline of PPP projects Guidelines on Pipeline Development (Selection and Prioritization) Launch of the PPP Knowledge Portala comprehensive database of all knowledge and information about the PPP Program and projects
149
Other Projects for 2013-2014

PPP Projects in the Pipeline
NLEX-SLEX Connector Road Integrated Transport System Project Civil Registration System IT Project Phase II Grains Central Project Enhanced O&M Panglao Airport Establishment of Cold Chain Systems O&M of Laguindingan Airport New Centennial Water Supply Bulacan Bulk Water Supply Project O&M of LRT Line 2 O&M of Puerto Princesa Airport Davao Sasa Port Integrated Luzon Railway Project Manila-Makati-Pasay-Paranaque Mass Transit System Regional Prison Facilities through PPP C-6 Ext: Laguna de Bay Flood Control Dike Expressway Calamba-Los Baos Toll Expressway Project Plaridel Bypass Toll Road Batangas-Manila (BatMan) 1 Natural Gas Pipeline LRT-1 Extension to Dasmarias Project O&M of Iloilo, Davao, and Bacolod Airports Project Manila Bay-Pasig River-Laguna Lake Ferry System Upgrading of the San Fernando Airport Modernization of the National Center for Mental Health Skyway Stage 3 MRT Line-7
Projects Under Development

Central Spine RORO Ferry Passenger Terminal Buildings Development O&M of Clark Airport Metro Cebu Expressway Project Tagum-Davao-General Santos High-Standard Highway C6 Expressway (South-East, East, and North Sections) Modernization of the Region 1 Medical Center Improvement/ Modernization of Kennon Road PhilHealth Information Technology Project Manila Heritage and Urban Renewal Project
150
Status of Projects (as of 10 September 2013)

Estimated Cost (Php Bn)
2.01 16.28 15.52 5.69
Projects
Agency
Procurement of Transaction Advisor

COMPLETED COMPLETED COMPLETED COMPLETED
Preparation of Business Case/ Feasibility Studies

Finalization of Project Structure (by Implementing Agencies)

ICC-Technical Board Approval

ICC-Cabinet Committee Approval

NEDA Board Approval

Bidding Stage
Contract Award
1 Daang Hari-SLEX Link Road Project 2 PPP for School Infrastructure Project (PSIP) Phase I
DPWH DepEd DPWH DOH
COMPLETED COMPLETED COMPLETED SUBMITTED BID UNDER EVALUATION SUBMITTED BID UNDER EVALUATION FOR BID SUBMISSION FOR BID SUBMISSION
COMPLETED COMPLETED COMPLETED
3 NAIA Expressway Project 4 Modernization of the Philippine Orthopedic Center
PPP for School Infrastructure Project (PSIP) Phase II
8.8
DepEd
COMPLETED
COMPLETED
COMPLETED
COMPLETED
COMPLETED
COMPLETED
6 Automatic Fare Collection System 7 Mactan-Cebu International Airport Passenger Terminal Building
1.72 17
DOTC DOTC
COMPLETED COMPLETED
COMPLETED COMPLETED
COMPLETED COMPLETED
COMPLETED COMPLETED
COMPLETED COMPLETED
COMPLETED COMPLETED
8 Cavite - Laguna (CALA) Expressway
35.42
DPWH
COMPLETED
COMPLETED
COMPLETED
COMPLETED
COMPLETED
COMPLETED
FOR PREQUALIFICATION
Rehabilitation, Operation & Maintenance of the 9 Angat Electric power plant (AHEPP) Auxilliary Turbines 4&5 10 LRT Line 1 Cavite Extension and O&M 11 NLEx-SLEx Connector Road 12 Integrated Transport System Project 13 Grains Central Project Civil Registration System Information Technology 14 Project Phase II 15 New Centennial Water Supply Source Project 16 Bulacan Bulk Water Supply Project Enhanced Operation and Maintenance of the New Bohol (Panglao) Airport Establishment of Cold Chain Systems Covering Strategic Areas in the Philippines Operation and Maintenance of the Laguindingan Airport
1.16
MWSS
COMPLETED
COMPLETED
COMPLETED
COMPLETED
COMPLETED
COMPLETED
FOR PREQUALIFICATION
59.2 21.2 5.06 0.4 TBD
DOTC DPWH DOTC DA NSO
COMPLETED COMPLETED COMPLETED COMPLETED COMPLETED
COMPLETED COMPLETED COMPLETED ONGOING ONGOING
COMPLETED COMPLETED COMPLETED
COMPLETED COMPLETED ONGOING
FOR REBIDDING
44.31 24.44
MWSS MWSS
COMPLETED COMPLETED
COMPLETED COMPLETED
COMPLETED COMPLETED
ONGOING ONGOING
17
1.9
DOTC
COMPLETED
COMPLETED
ONGOING
18
0.68
DA
COMPLETED
COMPLETED
ONGOING
19
TBD
DOTC
COMPLETED
COMPLETED
ONGOING
151
Status of Projects (as of 10 September 2013)

Finalization of Project Structure ICC-Technical Board (by Implementing Approval Agencies)
Projects
Estimated Cost (Php Bn) TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD
Agency
Procurement of Transaction Advisor
Preparation of Business Case/ Feasibility Studies
ICC-Cabinet Committee Approval
NEDA Board Approval
Bidding Stage
Contract Award
20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
O&M of LRT Line-2 O&M of the Puerto Princesa Airport Davao Sasa Port Integrated Luzon Railway Manila-Makati-Pasay-Paranaque Mass Transit System Regional Prison Facilities through PPP C-6 Extension: Laguna de Bay Flood Control Dike Expressway Calamba-Los Banos Toll Expressway O&M of Iloilo, Davao, and Bacolod Airports Upgrading of the San Fernando Airport Motor Vehicle Inspection System Modernization of the National Center for Mental Health Plaridel Bypass Toll Road LRT-1 Extension to Dasmarinas Manila Bay-Pasig River-Laguna Lake Ferry System Batangas-Manila (BatMan) 1 Natural Gas Pipeline Central Spine RORO Ferry Passenger Terminal Buidlings Development O&M of Clark Airport Metro Cebu Expressway Tagum-Davao-General Santos High-Standard Highway
DOTC DOTC DOTC DOTC DOTC DOJ DPWH DPWH DOTC BCDA DOTC DOH DPWH DOTC DOTC
COMPLETED COMPLETED COMPLETED COMPLETED COMPLETED COMPLETED COMPLETED COMPLETED ONGOING ONGOING ONGOING ONGOING ONGOING ONGOING ONGOING ONGOING
ONGOING ONGOING ONGOING ONGOING ONGOING ONGOING ONGOING ONGOING
TBD TBD TBD TBD TBD
DOTC DOTC DOTC DPWH DPWH UNDER CONCEPTUALIZATION
41 42 43 44 45
C-6 Expressway (Southeast, East, and North Section) Modernization of the Region 1 Medical Center Improvement/ Modernization of Kennon Road Philhealth IT Project Manila Heritage and Urban Renewal
TBD TBD TBD TBD TBD
DPWH DOH BCDA PhilHealth/ DOH DOTC/ DOF
152
III. Philippines Sovereign Credit Ratings Journey to Investment Grade
153
ROP An Investment Grade Nation

After over a decade of stagnant ratings, ROP achieves IG in less than 3 years
The Republic of the Philippines has achieved the nations first-ever investment grade credit ratings by Fitch and Standard & Poors, two of the three international credit rating agencies
8
8 BBB/Baa2
7 BBB-/Baa3
1 Nov 2010 S&P upgrades directly to BB/Stable without placing on any positive outlook 4 July 2012 S&P upgrades to BB+/Stable
2 June 2011 Fitch upgrade.s to BB+/Stable 5 Oct 2012 Moodys upgrades to Ba1
3 June 2011 Moodys upgrades to Ba2
July 2013 Moodys places Philippines rating under review for upgrade
6 Mar 2013 Fitch upgrades to BBB- and is the first agency to upgrade ROP to IG 2 4 5
6 BB+/Ba1
5 BB/Ba2
4 BB-/Ba3
7
3 B+/B1
May 2013 S&P upgrades to BBB-, giving ROP two IG ratings

Sep-11 Sep-12 Jun-12 Dec-11 Dec-12 Mar-12 Mar-13 Jun-13
Aug-03
Aug-04
Aug-05
Aug-06
Aug-07
Aug-08
Sep-09
Sep-10
Jun-03
Jun-04
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Feb-04
Feb-05
Feb-06
Feb-07
Feb-08
Feb-09
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Mar-10
Fitch
S&P
Moody's
Fitch Ratings upgrade of the Philippines reflects persistent strengthening of external finances, a strong policy-making framework, improvements in fiscal management leading to a sustained decline in public debt ratios, and enhanced growth prospects.
The upgrade on the Philippines reflects a strengthening external profile, moderating inflation, and the government's declining reliance on foreign currency debt.
Source: Fitch, S&P, Moodys 154
Mar-11
Jun-11
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Apr-04
Apr-05
Apr-06
Apr-07
Apr-08
Apr-09
2 B/B2
Credit Ratings What Are They?

Credit ratings still relevant today despite global financial crisis fallout
Credit ratings evaluate the credit-worthiness of a borrower defined as the willingness and ability of the borrower to repay debt on time and according to the agreed terms of the contract
Credit ratings are determined using the opinion of rating analysts and involves analysis of both qualitative and quantitative factors
A higher credit rating generally allows countries/ corporations to borrow from the international capital markets at a cheaper rate than if the entity had lower credit ratings
155
Credit Rating Agencies What They Do

Credit ratings play an important function for the international finance community
Credit Rating Agencies play a critical role for investors and issuers
Allow borrowers to access global bond markets and attract investment
Address the problem of information gaps between debt issuers and investors
Serve as a primary tool for a countrys advertising and branding
Supports other means of financing (trade finance and FDI) through risk and benchmarking
156
Credit Rating Agencies What They Do

Ratings are opinions, not expert recommendations
Rating agencies have been cited as having the most influence under their certification role
Rating Agencies Provide
Information Reliable
Monitoring Standardized End Users
Certification Frequent
Investors
Corporations
Financial Institutions
Governments
Multilaterals
157
Mapping of Rating Scales

ROP is amongst a select group of EM credits that have crossed the IG threshold
Credit Quality
AAA AA+ AA Aaa Aa1 Aa2 Aa3 A1 A2 A3 Baa1 Baa2 Baa3 Ba1 Ba2 Ba3 B1 B2 B3 Caa1 Caa2 Caa3 Ca C D AAA AA+ AA AAA+ A ABBB+ BBB BBBBB+ BB BBB+ B BCCC+ CCC CCCCC C RD D Currently highly vulnerable Default Currently vulnerable More vulnerable Less vulnerable Adequate Strong Very strong Extremely strong
Countries
Singapore United States
Investment Grade Ratings (IG)
AAA+ A ABBB+ BBB BBBBB+ BB BB-
Korea
Brazil
Vietnam
Noninvestment Grade Ratings (HY / Junk Status)
B+ B BCCC+ CCC CCCCC C SD D
Cambodia
Greece
Default
158
The Different Types of Credit Ratings

The sovereign credit rating is paramount, all others follow suit
The Sovereign Credit Rating sets the benchmark for all of the other ratings in the country
Financial Institutions Public Finance Sub-Sovereign
Sovereign
Structured Finance
Insurance
Corporations Fund Ratings Infrastructure & Project Finance
Central governments have unique powers, such as the ability to raise taxes, set laws, and control the supply of money, which generally make them more creditworthy than other issuers with less authority
159
How Do Sovereign Credit Ratings Impact the Markets?

Credit ratings are proven to impact the markets
Better ratings mean greater savings to issuers

5.5
IMF study1 shows reaching investment grade reduces sovereign spreads by 36% beyond what is implied by macroeconomic fundamentals2 This compares to a 5-10% reduction in spreads following upgrades within the investment grade asset class, and no impact for movements within the speculative grade asset class A separate IMF study3 also shows that negative outlook announcements are followed by statistically significant CDS spread widening; 100bps for advance economies and 160bps for EMs. The impact of rating changes is insignificant
% Yield
5.4
5.3
Investors demand higher yields from AA rated entities as compared to AAA
5.2
5.1
5.0
Notes: 1) IMF WP/11/44: Sovereign Credit Ratings and Spreads in Emerging Markets: Does Investment Grade Matter? 2) IMF study uses regression analysis based on a sample of 35 emerging market countries from December 1997 to February 2010. The paper uses end-of-period monthly observations of EMBI Global spreads for individual countries, drawn from Bloomberg. End-of-month long-term foreign currency sovereign credit ratings are collected for each country from Standard and Poors, Moodys Services and Fitch Ratings, and averaged across the three agencies 3) IMF WP/12/23: Are Rating Agencies Powerful? An Investigation into the Impact and Accuracy of Sovereign Ratings
4.9
4.8 Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
AA Median Yield
AAA Median Yield

160
How ROP Achieved Investment Grade

Key factors to IG
A confluence of 5 key factors helped the ROP secure an IG rating
1 2 3 4 5 6 7
External Balance Sheet Structural current account surplus with consistently robust remittances Large and growing foreign exchange reserves Gains in Governance and Supportive Political Backdrop Political stability on both national and regional level Core focus on good governance and weeding out corruption Reform Momentum Unprecedented levels of support for President with reform-minded agenda Sin tax, Reproductive Health, and significant steps toward Mindanao Peace Process Improvement in Public Finances and Debt Levels Gains in administrative measures toward tax collection have proved meaningful Overall debt levels have declined; debt has become increasingly longer-dated and denominated in local currency Healthy Economic Growth and Improved Outlook Strong levels of domestic consumption with new engines of growth coming online Pace of reforms has injected new level of confidence in countrys growth prospects Stable inflation environment Long-tested ability of the Central Bank to maintain macroeconomic and price stability in a downturn or boom scenario Favourable macroeconomic outcomes supported by a strong policy-making framework Strong banking system The Philippine banking system is well capitalized above regulatory requirements, profitable, with robust buffers against asset quality deterioration Philippine banks have liquid, deposit-funded balance sheets and sound loss-absorption capacities outcomes supported by a strong policy-making framework
161
Significance of Investment Grade

Benefits and implications of reaching IG
There are both tangible and intangible benefits to crossing the IG threshold
Financial Benefits
Policy Benefits
Corporate Benefits
Marks a milestone in ROPs financial market development Lowers cost of funding across the board, whether for bonds or bank loans Raises profile of ROP among global investors potentially leading to increased investment flow
Serves as a strong platform to achieve other national objectives virtuous cycle, increased investments, strong economic growth, and higher per capita income International affirmation of policymaking and the positive developments in the Republic
Improves access to bond markets for Philippine corporate borrowers and allows them ability to obtain investment grade rating Lowers the cost of funding for corporate borrowers
162
Strong Fundamentals Provide Buffer Against Market Volatility

Yields have risen less than peers while CDS levels continue to trade tightly
ROPs CDS spreads trade tighter than Malaysia and Thailand
320 280
Philippines
Yields have outperformed peers due to strong onshore bid

8
Yield (%) 5-Sep 1-Jan 3.903 2.265 7.729 4.843 5.709 4.285 3.279 (106.284 Apr) 4.182 2.616 2.994 1.757
Sovereign 5Y CDS Spreads (bps)

CDS spread (bps) 5-Sep 1-Jan 137 292 140 140 76 106 136 95 78 68 Indonesia Thailand Malaysia Korea change (bps) +31bps +156bps +45bps +62bps
Government Bond Yields (%)

change (bps) +164bps +289bps +142bps +301bps +157bps +124bps
292
7 6 5 Yield (%)
Philippines Sri Lanka Vietnam Indonesia Malaysia Generic 10Y
7.76 6.01 5.71 4.17 3.79 2.78
240 200 Bps 160 120 80 40 Jan-13
+8bps
140 140 137
4 3 2
76
1 0 Jan-13
Feb-13 Mar-13 PHILIP
Apr-13
May-13
Jun-13
Jul-13 Korea
Aug-13
Sep-13 INDON
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
THAI
MALAYS
Philippines 2021 Indonesia 2023
Sri Lanka 2022 US Generic 10Y
Vietnam 2020 Malaysia 2021 Sukuk
Normal correction in equities after record rise in 1H 2013 2013 Rebased Stock Exchange Performance (Jan 2013 = 100)
160 150 1 Jan 2013 = 100 140 130 120 110 100 90 80 Jan-13 Feb-13 Mar-13 Apr-13 Indonesia UK May-13 Jun-13 Jul-13 Aug-13 Sep-13 Thailand 112.7631939
Hi Low Last Peak-Trough Phil 127 99 103 28 Indon 121 92 94 29 Malay 107 100 102 7 Thai 118 92 94 26 Japan 150 120 135 31 UK 116 102 111 14 S&P 120 110 116 10
Relatively high P/E ratio shows confidence in Philippines Price to Earnings Ratio (x)
20 18 16 14 12 10 8 6 4 2 0 18.6 18.1 Current (5-Sep-13) 16.7 16.9 14.5 16.2 FY 2012 16.3
15.0
Price / Earnings (x)
Philippines
Indonesia
Thailand
Malaysia
Philippines Japan
Malaysia US (S&P)
163
Source: Bloomberg as of 5 September 2013; current P/E ratio is price divided by trailing 12 months earnings
Beyond Investment Grade

Key factors that will move the sovereign credit ratings up or down
What could change the rating - Up Sustained strong GDP growth that narrows income and development differentials with 'BBB' range peers An uplift in the investment rate that enhances growth prospects without the emergence of macroeconomic imbalances Broadening of the fiscal revenue base, as well as further improvements in the structure of the Philippine sovereign debt
Fitch
stock. What could change the rating Down A reversal of reform measures and deterioration in governance standards. Sustained fiscal slippage, leading to a higher fiscal debt burden. Deterioration in monetary policy management that allows the economy to overheat. Instability in the banking sector, leading to a crystallisation of contingent liabilities on the sovereign balance sheet. What could change the rating - Up Further progress in addressing the countrys key weaknesses Passage and effective implementation of structural revenue reforms
Moodys
More rapid reduction in the general government debt stock; and an acceleration of investment spending that ensures a higher economic growth trajectory. What could change the rating Down Emergence of macroeconomic instability that leads to a substantial deterioration in fiscal and government debt metrics, an increase in debt servicing costs, and/or an erosion of the countrys external payments position What could change the rating - Up Evidence of government revenue reforms that facilitate needed improvements in physical and human capital, and institutional and structural reforms that boost private sector investment, including FDI.
S&P
What could change the rating Down If the Philippines' external performance weakens significantly, external inflows prove difficult to manage and spur overheating in the economy that contributes to banking pressures If problems at one of the large conglomerates impair investor confidence, or if political developments cause the government to veer from its commitment to improving governance 164
Reaching IG A Result of the Virtuous Cycle

A virtuous cycle has propelled the Philippines to IG
IG was never the end-goal, but an outcome of good policies

Reaching IG is a purely a reflection of the progress the Philippines is making toward its Medium-term development goals
Virtuous Cycle
Obtaining a reputable third party stamp of approval assists the government in attracting the funds needed for further investment The virtuous cycle continues unabated; communication with the markets is key to ensuring this trend remains
165
IV. Profiles of Speakers and Panel Discussants
166
Government of the Philippines
Amando M. Tetangco, Jr. BSP Governor and Chairman of the Monetary Board Bangko Sentral ng Pilipinas
Mr. Amando M. Tetangco, Jr. is the Governor of the Bangko Sentral ng Pilipinas (BSP). He was reappointed for a second term commencing 4 July 2011. As BSP Governor, he serves as Chairman of the Monetary Board, the BSPs principal monetary policy-making body. He is also the Chairman of the Anti-Money Laundering Council (AMLC). A career central banker, Governor Tetangco has been in the service of the BSP for more than three decades. Prior to his first appointment as Governor in July 2005, he was Deputy Governor in-charge of the Banking Services Sector, Economic Research and Treasury of the BSP. He also served as Alternate Executive Director of the International Monetary Fund in Washington, D.C. from 1992 to 1994. Governor Tetangco is involved in various organizations in the Philippines and overseas. Domestically, he is, among other positions held, Chairman of the Philippine International Convention Center (PICC), Vice-Chairman of the Agriculture Credit Policy Council, member of the Capital Markets Development Council (CMDC) and the Export Development Council (EDC). Overseas, he represents the country in ASEAN Central Bank Forum, Executive Meeting of East Asia and Pacific (EMEAP) Central Banks, South East Asia Central Banks (SEACEN), South East Asia, New Zealand and Australia (SEANZA), and Center for Latin American Monetary Studies (CEMLA). In addition, he is the Governor for the Philippines in the International Monetary Fund (IMF) and the Alternate Governor in the World Bank (WB) and in the Asian Development Bank (ADB). Governor Tetangco studied economics and business administration at the Ateneo de Manila University. He finished his MA in Public Policy and Administration with a concentration in Development Economics at the University of Wisconsin-Madison in the United States. He has attended various training programs at different institutions including the Harvard Business School.
167
Cesar V. Purisima Secretary Department of Finance

Mr. Cesar V. Purisima is the Secretary of the Department of Finance, appointed by President Benigno S. Aquino on June 30, 2010. He is also chair of the Economic Development Cluster of President Aquinos cabinet. He also served as Secretary of the Department of Finance briefly in 2005 and was Secretary of Trade and Industry in 2004-2005. Secretary Purisima is a member of the Monetary Board of the Bangko Sentral ng Pilipinas. He serves as Governor for the Philippines at the World Bank and Alternate Governor for the Philippines at the International Monetary Fund. He is presently Governor for the Philippines at the Asian Development Bank (ADB). He was Chairman of the Board of Governors in 2011-2012. In May 2012, he chaired the 45th Annual Meeting of the Board of Governors held in Manila. Secretary Purisima was named Finance Minister of the Year 2012 by Euromoney for his careful and successful stewardship of the Philippine economy whose growth stood against the challenging global macro-economic backdrop. In 2011, he was recognized by the London-based magazine Emerging Markets as Finance Minister of the Year Asia 2011 for his strong policy track record and steadfast commitment to maintaining economic stability. He was conferred by the Republic of France the Chevalier de l Ordre national du Merite (rank of Knight) in the economic domain in 2001 for bringing together France and the Philippines. He was named Fellow of the Eminent Southeast Asians Programme, Singapore International Foundation in 2003. Secretary Purisima is a certified public accountant. He was Chairman and Managing Partner of the countrys largest professional services firm, SGV & Co. (a member firm of Andersen Worldwide until 2002 and presently member firm of Ernst & Young Global) until 2004. He became Area Managing Partner for Asia-Pacific for Assurance and Business Services of Andersen Worldwide, the first and only Filipino so far to head the Area practice of a Big 4 accounting firm. In Ernst & Young Global, he was a member of both the Global Executive Board and Global Practice Council. He has been conferred the highest awards in accountancy by the Professional Regulation Commission and the Philippine Institute of CPAs. Secretary Purisima has a masters degree in business administration from the JL Kellogg School of Management, Northwestern University. He obtained his commerce degree from De La Salle University. He was conferred Doctor of Humanities, Honoris Causa, by Angeles University.
168
Arsenio M. Balisacan Secretary National Economic and Development Authority
Professor Arsenio M. Balisacan is the Secretary of Socioeconomic Planning and Director-General of the National Economic and Development Authority. Prior to his appointment in the Cabinet of President Benigno S. Aquino III in May 2012, he was Dean and Professor of the University of the Philippines (UP) School of Economics and Executive Director of the Philippine Center for Economic Development. He also served as Director-Chief Executive of the Southeast Asian Regional Centre for Graduate Study and Research in Agriculture (SEARCA, 20032009) and as Undersecretary for Policy and Planning of the Department of Agriculture (2000-2001 and 2003). Before joining the faculty of the UP in 1987, he was Research Fellow at the East West Center in Honolulu and Economist at the World Bank in Washington, D.C. An Adjunct Professor of the Australian National University and an Academician of the National Academy of Science and Technology, he has authored or co-edited seven books and published about 100 academic papers and book chapters on various development issues, including poverty, inequality, agricultural and regional development, human development, impact evaluation and public governance.
169
Florencio B. Abad Secretary Department of Budget and Management
Currently working as Secretary of Budget and Management in the new Aquino administration, Florencio Butch Barsana Abad has been involved in public service for more than a decade, serving in various capacities upon the restoration of democracy after Martial Law. He started his political career by serving as Representative of Batanes in 1987 and was appointed Secretary of Agrarian Reform under the first Aquino administration. He later returned to Congress as House Representative of Batanes in 1995, where he served three consecutive terms. In 2004, he began his term as Secretary of Education, during which he pursued key reforms in basic education that he started as a legislator. From 1999 to 1994, Secretary Abad served as president of the Liberal Party, where he continues to be a highly influential figure and is widely regarded as a mentor for political aspirants. These include President Benigno S. Aquino III himself, whom Abad served as campaign manager in his Senatorial and Presidential bids in 2007 and 2010, respectively. Since assuming the role of Budget and Management Secretary, he has successfully spearheaded several expenditure reformsincluding ZeroBase Budgeting, Bottom-Up Budgeting, early budget enactments, deeper civil society engagement, and landmark digitization initiatives effectively bringing greater transparency, accountability, and openness in the public expenditure process. He completed his secondary and college education at the Ateneo de Manila University, where he obtained a bachelors degree in Business Management in 1980. He was accepted in the Ateneo College of Law as a Presidents scholar and later passed the Bar Examination in 1985. Secretary Abad was also a fellow in the Edward Mason Program in Public Policy and Management at the Kennedy School of Government in Harvard University in Cambridge, Massachusetts, where he successfully obtained his Masters in Public Administration.
170
Gregory L. Domingo Secretary Department of Trade and Industry
Mr. Gregory L. Domingo was appointed as Trade and Industry Secretary by President Benigno Aquino III in July 2010. He previously served as Department of Trade and Industry (DTI) Undersecretary for the Industry and Investments Group (IIG) and Managing Head of the Board of Investments (BOI) from May 2001 to April 2004. Prior to his stints with the government, he was President of Carmelray-JTCI Corp. (CJC) from July 1997 to November 2000. He worked for ChaseManhattan Bank in various capacities from July 1989 July 1997 and with a number of financial institutions in the United States (First Boston, Drexel Burnham Lambert and Mellon Bank) from 1982 to 1989. Secretary Domingo also served as Vice Chairman of Belle Corporation and director for SM Investments Corp., BDO Private Bank, PASUDECO, Manila Electric Corp., Pico de Loro Beach and Country Club, Wharton-Penn Club, and Foreign Exchange Association of the Philippines. He was also a member of the Open Market Committee of the Bankers Association of the Philippines (BAP). Secretary Domingo obtained his Masters of Science in Operations Research at the Wharton School of the University of Pennsylvania in 1982. He finished his MBA with distinction at the Asian Institute of Management in 1980, and graduated with a bachelors degree in Management Engineering at the Ateneo de Manila University in 1976.
171
Rogelio L. Singson Secretary Department of Public Works and Highways
Mr. Rogelio L. Singson, in leading the State's engineering and construction arm as its 42nd head, advocates transformation and innovation in governance through transparency and accountability, doing the right project, for the right price and the right quality, and undertaking more publicprivate partnership (PPP) projects. Secretary Singson has extensive experience in both government and private sector in the field of privatization and public-private partnership, management of tollroads and expressways, water and power utilities privatization, airports, seaports and resorts. He was President and Chief Executive Officer of Maynilad Water Services, Inc. after its re-privatization from July 1, 2007 to June 30, 2010 under new owners, the DMCI-Metro Pacific Consortium. He also served in various executive positions both in government and private entities to include the position of Chairman and President of Bases Conversion and Development Authority. His other past involvements in the public sector includes serving as Executive Director of the Coordinating Council of the Philippine Assistance Program which coordinate and monitor the official development assistance project and programs from May 1991 to November 1992; and Assistant Cabinet Secretary under the Office of President Corazon C. Aquino from July 1987 to May 1991. Secretary Singson obtained his Bachelor of Science Degree in Industrial Engineering from the University of the Philippines in 1971 and attended a Masters Program in Public & Business Management at the De La Salle University. He also attended various trainings abroad on PPP, privatization and Build Operate Transfer (BOT) Schemes.
172
Joseph Emilio Aguinaldo Abaya Secretary Department of Transportation and Communications
Mr. Joseph Emilio Aguinaldo Abaya was appointed as Transportation and Communications Secretary by President Benigno S. Aquino III on October 18, 2012, making him the 17th head of the department. Upon his assumption to office, Secretary Abaya was ordered by the President to continue intensifying the buildup of transportation infrastructure in the country, in line with DOTCs objective of providing the people with convenient, affordable, reliable, efficient and safe transport systems on land, sea and air. Prior to his appointment, Secretary Abaya was a member of the House of Representatives, representing the 1st District of Cavite for three consecutive terms beginning 2004. He chaired the Committee of Appropriations in the 15th Congress. Before joining public service, he was a Lieutenant Commander in the Philippine Navy, having earned this rank over the course of 20 years on active duty. He started out as a naval officer aboard different vessels and was eventually assigned to the presidential yacht, BRP Ang Pangulo. Notably, he served as aide-de-camp of former President Corazon Aquino, over two decades before her son would appoint him to his own official family. Secretary Abaya obtained his Electrical Engineering degree from the University of the Philippines-Diliman and received citations as a University and College Scholar. After a year in UP, he then entered the Philippine Military Academy (PMA) and later on was sent to the US Naval Academy (USNA) in Annapolis, Maryland, where he earned his Bachelor's Degree in Mathematics. He also obtained his Master of Arts Degree in Electrical Engineering at Cornell University in Ithaca, New York. He received his Juris Doctorate from the Ateneo de Manila University School of Law in 2005 and was admitted to the Philippine Bar in 2007.
173
Carlos Jericho L. Petilla Secretary Department of Energy
Prior to his appointment as the Secretary of the Department of Energy, Carlos Jericho L. Petilla was the Governor of Leyte for three consecutive terms since 2004. Born to a political family in Palo, Leyte, he is the son of former Leyte Governor Leopoldo E. Petilla and Palo Mayor Remedios L. Petilla, who also served as Governor of the province and Representative of the First congressional District of Leyte. His effective governance during his term made him a Local Economic Development (LED) Champion as he instituted innovative practices focusing on competitiveness and strong public-private partnership, which led to the increase in growth rate in terms of trade and investment as well as tourism in Leyte. Focusing on the provision of basic services, he instituted various improvements in the provinces health care, education, and development infrastructures. His vast experience in information technology has also greatly benefitted Leyte through the improvement of government processes for better, more transparent, and efficient public service. These measures earned awards for Leyte, such as, The Seal of Good Housekeeping (October 2011) and the Gawad Pamana ng Lahi Award (October 2011) from the Department of Interior and Local Government; Most Business Friendly LGU Award (2011, 2010, 2008) from the Philippine Chamber of Commerce and Industry; and the Hall of Fame - The Hospital Enhancement for Leytes Progress (HELP) Project (2011) and Hall of Fame Presidential Award for Outstanding Leadership in Providing Quality Health Service to his Constituents from 2006-2010 (2010) from the Philippine Hospital Association throughout Secretary Petillas political stint in the province. An excellent manager, Secretary Petilla was also given the task to head the Regional Development Council (RDC) and the Regional Peace and Order Council (RPOC) of Eastern Visayas which are crucial in setting economic and social targets and directions as well as ensuring peace, order and public safety in the whole region. Secretary Petilla also became an educator for a number of years at the Ateneo de Manila University and was a consultant for various companies in the Philippines and overseas.
174
Proceso J. Alcala Secretary Department of Agriculture
A civil engineer by profession, Mr. Proceso J. Alcala was appointed as Secretary of the Department of Agriculture (DA) by President Benigno S. Aquino III in June 30, 2010. Prior to his appointment, he served as Representative of the 2nd District of Quezon Province for two three-year terms (2004-2007 and 2007-2010). As a lawmaker, Secretary Alcala authored the Organic Agricultural Act of 2010 (RA 10068), the Mounts Banahaw-San Cristobal Protected Landscape Act (RA 2718), and co-authored the Climate Change Act (RA 9729), and the Expanded Senior Citizens Act (RA 9994). Among other projects, he led the establishment of the Sentrong Pamilihan ng Produktong Agrikultura sa Quezon a trading center in Sariaya town that allowed farmers to sell their produce directly to wholesale buyers. This has resulted in increased incomes for their families. This trading center now serves as a model throughout the country. At the DA, Secretary Alcala laid the Agrikulturang Pilipino or Agri-Pinoy framework as guide for the plans and goals of the Department for a progressive, sustainable and competitive national agriculture and fisheries sector. Through his leadership and hands-on management style, he enjoined all stakeholders to put the farmers and fishers at the center of all programs, and helped restore trust in government. With this in mind, he has visited all 80 provinces of the country, meeting and feeling the pulse of small farmers, fisherfolk and local officials. This has resulted in field-based methods to deliver improved, effective and direct assistance to farmers, fishers and agricultural entrepreneurs. Through his leadership at the DA, attaining rice sufficiency by 2013 is now within reach and no longer the elusive dream throughout many years in the past. The Food Staples Sufficiency Program benefits Filipino farmers who are now the main suppliers of the countrys rice buffer stock. Secretary Alcala obtained his B.S. Civil Engineering degree from the Luzonian University Foundation in 1978 and is a lifetime member of the Philippine Institute of Civil Engineers.
175
Ramon R. Jimenez, Jr. Secretary Department of Tourism
What truly makes the Philippines a unique, amazing, and special place to see? For the Department of Tourism, it has found the simplest, most direct answer to the fundamental question of every traveller through its tourism campaign, Its more fun in the Philippines. The new expression is a powerful, compelling idea that draws strength from the fact that it is a fundamental truth about the Philippinesthe Philippines is not just a place to see, it is a place to be. The man behind this tagline that became a top trending topic on social media sites is a writer, mentor, former instructor, marketing communications expert, and one of the pillars of Philippine advertising the Honorable Ramon R. Jimenez, Jr., Secretary of the Department of Tourism (DOT). Today with over 75,000 memes of the tagline contributed by people from all walks of life, the campaign has certainly built a new sense of excitement around the tourism brand and elicited renewed enthusiasm for the countrys tourism industry. In keeping with his promise to make tourism the peoples business, Secretary Jimenez aims to transform the department into a primary selling unit with the ultimate goal of not only improving statistics, but also ensuring that every endeavor would be fulfilling and profitable for Filipinos. Under his leadership, the DOT has joined convergence projects with government agencies and the private sector, and actively espoused policy reforms. Secretary Jimenez hopes to build enough energy around tourism to give the Philippines the global attention it deserves. Brimming with confidence, he looks forward to meeting the target of 10 million foreign tourist arrivals by 2016, and seeing tourism finally take its place as a key driver of socioeconomic progress in the country, to make it more fun for all.
176
Ramon Ricky A. Carandang Secretary Presidential Communications Development and Strategic Planning Office
Mr. Ramon "Ricky" A. Carandang is a graduate of the Ateneo de Manila University with a Bachelor of Science degree in Management Economics. He spent his first years as a professional in the investments industry, working as a stock broker for Pryce Securities, HG Asia Securities, and Kim Eng Securities. In 2000, he joined Newsbreak as President and Business Editor then later worked for ABS-CBN News. During his stint in ABS-CBN News Channel (ANC), he was analyst and host for such productions as The Rundown and The Big Picture. He also worked as field reporter for TV Patrol and Bandila, as well as presenter for the current affairs program The Correspondents. Citing his expertise in the field of communications and his track record in finance and economics, he was appointed Secretary of Presidential Communications Development and Strategic Planning by President Benigno S. Aquino III in July 2010.
177
Rozzano Rufino B. Biazon Commissioner Bureau of Customs
Mr. Ruffy B. Biazon was appointed by President Benigno S. Aquino III as the Commissioner of Customs on September 16, 2011. He is a former member of the Philippine House of Representatives, serving in the 12th, 13th and 14th Congress from 2001 to 2010. He represented the Lone Congressional District of Muntinlupa City. In Congress, he served as Chairman of the Committee on Metro Manila Development, Vice Chairman of the Committee on National Defense and Security, Vice Chairman of the Committee on Information and Communications Technology, Vice Chairman of the Committee on Appropriations and member of the Congressional Oversight Committee on Visiting Forces Agreement. His three terms as legislator was marked by very significant achievements. He was principal author of 8 Republic Acts and co-author of 36 others. In his last term in Congress, he filed a total of 81 bills and resolutions, most of which are national in scope. For his exemplary performance as House Representative, Commissioner Biazon was cited by the Philippine Daily Inquirer as one of the most prolific legislators. The Philippine Graphic Magazine also included him as one of the Top 100 Young Leaders of the country and the Philippines Free Press Magazine as an Outstanding Congressman.
178
Kim S. Jacinto-Henares Commissioner Bureau of Internal Revenue (BIR)
Atty. Kim S. Jacinto-Henares was appointed as Commissioner of the Bureau of Internal Revenue in July 2010. Prior to her appointment, Commissioner Henares was Senior Private Sector Development Specialist at the World Bank Group where she acted as co-convenor, for and in behalf of the International Finance Corporation (IFC) for the Growth and Investment Climate Working Group of the Philippine Development Forum, a group created to establish the national strategy for increasing growth and improving the investment climate in the Philippines. She also implemented, supervised and monitored the World Banks National Program Supporting Tax Administration Reform (NPSTAR) a US$11 Million loan package granted to the BIR to implement reforms in tax administration. Commissioner Henares was the Deputy Commissioner for the Special Concerns Group of the BIR from August 2003 November 2005 and was a consultant to the Commissioner from January to August 2003. As an international development and legal consultant to notable international organizations, she served as trade expert to the EU-funded ASEAN Single Window Project; as the international law expert to the USAID-funded Project for the development of the Philippines national strategy of accession to the Revised Kyoto Convention; as a consultant to the Change Management Component of the AUSAID-funded Philippine Judicial Reform Project; and as the Large Taxpayer Unit Adviser to the Revenue Department of the Ministry of Finance of Afghanistan. She has also served the Philippine Government in other capacities, most notably as a Governor of the Board of Investments; as Chair of the Cagayan Economic Zone Authority; as Director of the Power Sector Assets & Liabilities Management Corporation and National Power Corporation; and as a Representative of the Secretary of Trade and Industry to the Investment Coordinating Committee. Commissioner Henares background is equally distinguished and covers both the accounting and legal professions. She obtained her Master of Laws degree major in International and Comparative Law from Georgetown University and has taken further studies in Canadas University of New Brunswick, McGill University and University of Toronto. She earned her Bachelor of Science in Commerce major in Accounting from the De La Salle University and Bachelor of Laws degree from Ateneo de Manila University.
179
Cosette V. Canilao Executive Director Public-Private Partnership (PPP) Center
Ms. Cosette V. Canilao is the Executive Director of the Public-Private Partnership (PPP) Center. Prior to joining the PPP Center, she was a Director of Standard Bank where she established and headed its distressed debt servicing business in the Philippines, and as President and CEO of the banks various Special Purpose Vehicle (SPV) companies. She is also a former partner of PricewaterhouseCoopers where she headed the Crisis Management Practice and Financial Services (FS) Industry consulting. She started her career in program lending and corporate banking. Executive Director Canilao holds a Master of Science in Finance degree from the University of the Philippines. She has attended numerous trainings in the course of her career including executive programs at the Harvard Business School and Harvard Kennedy School of Government.
180
Teresita J. Herbosa Chairperson Securities and Exchange Commission
Ms. Teresita J. Herbosa graduated with the degrees of Bachelor of Arts cum laude and Bachelor of Laws cum laude from the University of the Philippines. She obtained her Master of Comparative Law degree from the University of Michigan Law School in Ann Arbor, Michigan. As the Chairperson of the SEC, she applies the experience she had gained from private law practice to execute and administer policies, decisions, orders and resolutions of the SEC. She also has the general executive direction and supervision of the work and operation of the SEC. Since her appointment in May 2011, Chairperson Herbosa has undertaken to complete the computerization of SEC operations. She has embarked on an extensive capacity building of SEC personnel through training, recruitment and adoption of a performance based evaluation system. Chairperson Herbosa having specialized in litigation for more than 30 years at ACCRALAW, has directed the SEC departments concerned to step up investigations and enforcement actions through the imposition of administrative sanctions and filing of criminal cases against persons who commit securities law violations, to review and propose changes in existing laws and rules, to monitor and assess the risks and finances of secondary licensees, and to require strict compliance with SEC requirements. Apart from her job at the SEC, by law, Chairperson Herbosa is a member of the Anti-Money Laundering Council (AMLC), heads the Business and Economic Sector of the Office for Competition under the DOJ, and is Chairperson of the Credit Information Corporation which is the central credit bureau of the country.
181
Private Sector
Guillermo M. Luz Private Sector Co-Chairman National Competitiveness Council
Mr. Guillermo Manuel Luz is the Private Sector Co-Chairman of the National Competitiveness Council, a public-private sector body which develops strategy for the long-term competitiveness of the Philippines through policy reforms, project implementation, institution-building, and performance monitoring. He is Associate Director of Ayala Corporation, the holding company of one of the oldest and largest business groups in the Philippines, with business activities in real estate development, banking and financial services, telecommunications, water infrastructure development and management, automotive dealership and distribution, business process outsourcing, electronics manufacturing solutions, and new investments in power, renewable energy and infrastructure. He was Executive Vice President and Chief Operating Officer of Ayala Foundation from December 2006 to May 2011, a foundation which manages projects in education, environment, entrepreneurship, arts and culture, and community development. He also served as Director of Ayala Museum from January 2010 to May 2011. He was Executive Director of the Makati Business Club, a leading business organization and think tank, from 1987 to 2006 and served on its staff since 1983.
182
Private Sector
Manolito T. Tayag Country Managing Director Accenture, Inc. (Philippines)

Mr. Lito T. Tayag is the Country Managing Director of Accenture Philippines, with oversight responsibility for the growth and responsibility of the Philippine practice in Technology, Business Process Outsourcing (BPO) and Management Consulting, servicing Accenture clients in Europe, North America, Asia Pacific and the Philippines. He has also direct responsibility for the growth and operations of the Management Consulting and Philippine domestic business. Mr. Tayag counts several years of solid experience in technology and outsourcing. In his career at Accenture, he has played a key role in building Financial Services (FS) client accounts, developing the Financial Services industry group capability, and enhancing global visibility for the Global Delivery Network (GDN) for Technology in the Philippines. He is a member of the Board of Trustees of the IT - BPO Association of the Philippines (IBPAP) since 2011 and was elected to the Board of Directors of the Philippine Software Industry Association (PSIA) in 2006 and 2007. He is in the board of two academic schools in Pampanga. He was a part-time lecturer on information technology subjects at the Ateneo de Manilas School of Management in 1999-2003. He was a Management Engineering graduate of Ateneo de Manila University.
183
Private Sector
Jaime Augusto Zobel de Ayala Chairman and CEO Ayala Corporation
Mr. Jaime Augusto Zobel de Ayala is the Chairman and CEO of Ayala Corporation, the holding company of the oldest business group in the Philippines. Ayala Corporation has subsidiaries and affiliates in real estate development, telecommunications, banking and financial services, electronics manufacturing, water distribution, automotive dealerships, business process outsourcing, and overseas real estate investments. It also recently ventured into power and transport infrastructure. Apart from his responsibilities on the boards of the Ayala Group of companies, Mr. Zobel is a member of various international and local business and socio-civic organizations, including the JP Morgan International Council and the Mitsubishi Corporation International Advisory Committee. He is also Chairman of the Harvard Business School Asia-Pacific Advisory Board, member of the Harvard Global Advisory Council, Chairman of the Asia Business Council, former Chairman of the Board of Trustees of the Ramon Magsaysay Awards Foundation. He is the Chairman of the World Wildlife Fund Philippine Advisory Council and a member of the International Business Council of the World Economic Forum. He is also the Philippine Representative to the APEC Business Advisory Council. In 2007, he received the Harvard Business School Alumni Achievement Award, the schools highest recognition. Mr. Zobel is a recipient of the Presidential Medal of Merit in 2009, and was awarded the Philippine Legion of Honor (with rank of Grand Commander) in 2010. Both were awarded by the President of the Republic of the Philippines to recognize outstanding public service that has benefited the Republic, particularly in the preservation of the honor of the country and in nation building. Mr. Zobel studied at Harvard University where he earned his BA in Economics (with honors) in 1981 and his MBA in 1987. He is married to Ms. Elizabeth Eder Zobel de Ayala and has four children. He enjoys adventure motorcycling in his spare time.
184
Private Sector
John Martin Miller Chairman and CEO Nestl Philippines, Inc.
Mr. John Miller was appointed Chairman and Chief Executive Officer of Nestl Philippines, Inc. in October 2009. Before this, he was Chairman and CEO of Nestl Indochina, a post he assumed in January 2008 after holding the position of Managing Director of Nestl Singapore Pte. Ltd., his first assignment in Nestl. Mr. Miller joined Nestl in August 2006, after serving as Senior Vice President for Danones Biscuit business in the Asia Pacific region, also based in Singapore. While in Danone, he was a member of the Asia Pacific Management Committee and sat on the boards of Britannia Industries Ltd in India and Continental Biscuits Ltd in Pakistan. Prior to this, Mr. Miller was the Senior Vice President for the Unilever Home and Personal Care business in Africa, Middle East and Turkey. In earlier assignments with Unilever, he held various senior management positions in marketing in the Czech and Slovak Republics, Malaysia, and Indonesia. A graduate of the University of Durham in England with a Bachelor of Arts degree in English Literature and Geography, Johns first overseas assignment was as Country Manager in the United Arab Emirates in 1984. He has also worked in brand marketing in the UK.
185
Private Sector
Michael Rodriguez Managing Director Macquarie Infrastructure and Real Assets
Mr. Michael Rodriguez is a Managing Director of Macquarie Infrastructure and Real Assets (MIRA), the worlds premier manager of infrastructure funds, with responsibility over MIRAs operations in the Philippines, and the management of the PHP26 billion Philippine Investment Alliance for Infrastructure (PINAI) Fund. The PINAI Fund is a 10-year, close-ended fund established in July 2012 by leading domestic and foreign institutional investors to invest in both green- and brownfield infrastructure assets and projects within the Philippines. It is to date the largest and the only fund to be raised specifically for infrastructure investment in the country. Mr Rodriguezs career has been exclusively in banking and finance, both in the Philippines and overseas, for over thirty years. The past seventeen years, however, have been dedicated to infrastructure investment, with Mr Rodriguez assuming senior positions at private equity firms and funds in the Asia-Pacific and MENA regions. With his involvement in the closure and management of a number of infrastructure investments, Mr Rodriguez is highly experienced in all aspects of the entire private equity investment value chainfrom deal identification and execution to asset management and eventual exit. He has been exposed to a wide range of infrastructure sectorsparticularly transportation, telecommunications, social infrastructure, and energyand has sat in a number of company Boards, mainly to represent the investment funds he managed. As the Managing Director of the PINAI Fund, Mr Rodriguez and his team of investment professionals have been at the forefront of PPP transactions launched recently by the Philippine Government, as a principal member of bidding consortia, and in providing, where possible, assistance to grantor entities and private sector players in helping improve PPP project development and the bidding process. PINAI is also constantly working on developing privately negotiated infrastructure investment opportunities with proven developers and operators.
186
V. Directory of Economic Agencies
187
Directory
Bangko Sentral ng Pilipinas Governor Amando M. Tetamgco, Jr. A. Mabini St. cor. P. Ocampo St., Malate Manila Telephone Number: (632) 708-7206 Fax Number: (632) 708-7210 www.bsp.gov.ph Department of Agriculture Secretary Proceso J. Alcala 4/F, DA Annex Bldg. Diliman Quezon City Telephone Number: (632) 920-3986 / 920-2223 Fax Number: (632) 926-6426 www.da.gov.ph Department of Budget and Management Secretary Florencio B. Abad General Solano St., San Miguel, Manila Telephone Number: (632) 733-2993 Fax Number: (632) 735-4936 www.dbm.gov.ph Department of Energy Secretary Carlos Jericho L. Petilla Energy Center, Merritt Road, Fort Bonifacio, Taguig City Telephone Number: (632) 840-2008 Fax Number: (632) 812-6194 www.doe.gov.ph Department of Finance Secretary Cesar V. Purisima 6/F, Department of Finance Building, Roxas Boulevard, Manila Telephone Number: (632) 523-9215 / 523-9219 Fax Number: (632) 526-8474 www.dof.gov.ph www.perangbayan.com Bureau of Customs Commissioner Rozzano Rufino B. Biazon BOC Bldg., South Harbor, Port Area, Manila Telephone Number: (632) 527-4537 Fax Number: (632) 527-4573 www.customs.gov.ph Bureau of Internal Revenue Commissioner Kim S. Jacinto-Henares National Office Bldg, Agham Road, Diliman, Quezon City Telephone Number: (632) 921-0430 Fax Number: (632) 925-1789 www.bir.gov.ph Securities and Exchange Commission Chairperson Teresita J. Herbosa SEC Bldg., EDSA, Greenhills Telephone Number: (632) 584-5343 / 584-5767 Fax Number: (632) 584-5498 www.sec.gov.ph
188
Directory
Department of Public Works and Highways Secretary Rogelio L. Singson Bonifacio Drive, Port Area, Manila Telephone Number: (632) 304-3300 Fax Number: (632) 304-3020 www.dpwh.gov.ph Department of Tourism Secretary Ramon R. Jimenez, Jr. Department of Tourism Bldg., T.M. Kalaw St., Manila Telephone Number: (632) 524-1751 Fax Number: (632) 521-7374 www.tourism.gov.ph Department of Trade and Industry Secretary Gregory L. Domingo Industry and Investments Bldg., Senator Gil Puyat Ave. Makati City Telephone Number: (632) 890-9333 Fax Number: (632) 899-5518 / 896-1166 www.dti.gov.ph Department of Transportation and Communications Secretary Joseph Emilio A. Abaya The Columbia Tower, Brgy. Wack-Wack Ortigas Ave. Mandaluyong City Telephone Number: (632) 726-7125 Fax Number: (632) 726-7104 www.dotc.gov.ph National Economic and Development Authority Secretary Arsenio M. Balisacan 12 Blessed Jose Maria Escrave Dr., Ortigas Center, Pasig City Telephone Number: (632) 631-3716 / 631-3723 Fax Number: (632) 631-3747 www.neda.gov.ph Public-Private Partnership Center Executive Director Cosette V. Canilao NEDA-sa-QC, EDSA, Diliman, 1103 Quezon City Telephone Number: (632) 929-5187 Fax Number: (632) 929-8592 www.ppp.gov.ph
189
VI. Investor Relations Office Brochure
190
Investor Relations Office

Promoting Excellence in Investor Relations. Enhancing Sovereign Value
Strengthening the Investor Community 12 Years and Beyond
The effective implementation of the Governments economic program and its success depends on regular two-way dialogue between economic policy makers and the investment community. The Investor Relations Office (IRO) was established in July 2001 to strengthen the countrys relations with investors and other stakeholders by promoting active channels of information flow and dialogue between economic policy makers and investors. Based in the Philippine central bank, the Bangko Sentral ng Pilipinas (BSP), the IRO has a dedicated staff comprised of trained economists and communication specialists who work with colleagues in the BSP and the economic agencies to implement a wide-ranging program of investor relations activities. As the Government has implemented its economic reform program over the last twelve years, the IROs program of investor outreach has helped to ensure that investor decisions benefit from a comprehensive understanding of the progress in reforms and what they mean for the economic fundamentals of the Philippines. In turn, the Governments economic reform program has made the economy relatively more resilient amid the global financial and economic crisis. With stable macroeconomic fundamentals, the Philippines remains as one of the most viable economies for investments in the emerging market. The IRO is proud to have played a role in communicating the successes of the Governments reform program in the last twelve years and is committed to continuing its efforts to promote the Philippine economy.
Serving Philippine and International Stakeholders

The IRO provides services to a wide range of stakeholders the Governments economic agencies, financial institutions, credit rating agencies, bilateral and multilateral organizations, domestic and foreign investors, the diplomatic corps, business people, the media and the general public. All services to its stakeholders are underpinned by a set of fundamental principles: transparency, accessibility, timeliness, consistency and feedback. The IRO adopts a multi-pronged approach to serving its stakeholders through: Dissemination of key economic and financial information about economic policy objectives and performance Seeking market feedback on current and proposed policy measures Providing feedback to economic policy-makers about investor sentiment Facilitating candid and constructive dialogue between policy-makers and investors
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Investor Relations Office

Promoting the Philippine Economy at Home and Abroad
The IRO undertakes a range of initiatives to build awareness among domestic and international investment audiences around the Governments economic reform program, promote specific investment opportunities in the Philippines and facilitate information exchange and dialogue between key economic policy decision-makers in the Government and domestic/international investors. These initiatives include: Regular Economic Briefings to update the business community, media and industry organizations on the countrys economic performance Investor Roadshows to bring the Governments resilient economic performance record, commitment to sound economic management and responsible reform to members of the international financial community Media Briefings to raise awareness of the Governments progress in economic reforms and plans for ongoing reforms Government Policy Roadshows to increase the business communitys understanding of government policy measures to generate support for the policy implementation process Investor Teleconferences to provide timely updates on key economic performance indicators E-mail service to keep investors and other investors abreast of data releases on a regular basis An English Language website, www.iro.ph, to provide a wide range of easily accessible information about the Philippines economic performance and the governments economic policies
Contact Information
For further information about the Investor Relations Office, or about the Philippine economy, please contact: Editha L. Martin Investor Relations Office Bangko Sentral ng Pilipinas A. Mabini St. cor. P. Ocampo St. Malate Manila, Philippines 1004 Tel: (632) 708-7487 / (632) 336-7124 Email: Emartin@bsp.gov.ph Fax: (632) 708-7489 Website: www.iro.ph
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Investment Grade Philippines: Seizing Opportunities To Achieve Inclusive Growth

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Investment Grade Philippines: Seizing Opportunities to Achieve Inclusive Growth

III. IV. V. VI.

2 3 17 29 42 54 55 73 89 110 127 138 144 153 166 187 190

I. Macroeconomic Performance and Outlook

Secretary Arsenio M. Balisacan National Economic and Development Authority

The Philippine Economy Sustained Robust Growth in H1 2013

Sound Macroeconomic Fundamentals Supported this Remarkable Performance

Favorable Interest Rate and Sound Banking System

Sustainable Fiscal and External Position

-0.2 54.7 61.4 -0.9 54.8 53.9 -1.0

Fiscal Balance to GDP (RHS)

External Debt to GDP, lhs Current Account to GDP, rhs

5.3 4.0 3.0 2.0 1.0 2.922.8

3.2 27.0 24.1

Our Competitiveness also Increased

Global Competitiveness Index (GCI) Report

Moody's Upgraded to Ba1(July 25, 2013)/Rating under Review for Upgrade

S&P's Upgraded to BBB-(May 2, 2013)/Stable

Source: World Economic Forum

Philippine Development Plan Targets by 2016

Poverty Incidence down to

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

27.9% (H1 2012) 28.6% (H1 2009)

Particularly Employment Generation

Ave 2010 38,893 36,035 54.5 2,859 7.4 6,762 18.8

Ave 2012 40,426 37,600 57.2 2,826 7.0 7,514 20.0

Source: Labor Force Survey, National Statistics Office

And Poverty Reduction to Achieve Inclusive Growth

Poverty Incidence Among Population by Region 2011 (%)

64.0 2012 14.4

Other Luzon Visayas Mindanao

*Philippine Development Plan Target Source: National Statistical Coordination Board

We also Have our Priority Sectors to Support Inclusive Growth

H1 2013 Actual 7.6 1.4 10.6 7.1

2013 Target 6.0-7.0 3.5-4.5 6.4-7.5 6.3-7.3

2014 Target 6.5-7.5 3.2-4.2 7.4-8.5 6.7-7.6

Supported by the Following Growth Drivers

while Taking Advantage of Opportunities

Demographic transition Rising middle-income class, continued growth of working-age population

Monetary, External and Financial Sectors

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

Policy/Reform Milestones and Their Impact

Impact Price stability and non-inflationary growth

Monetary Policy Settings Remain Supportive of Non-Inflationary Growth

Lower bound of target Upper bound of target

10 Aug13: YTD= 2.9%2.1% Jan-Aug 2.8% July 1313: = 2.5%

External debt-to-GDP ratio declines significantly

External Debt (US$ Billion) and External Debt/GDP (%)

External debt in US$ billion (lhs) External debt as % of GDP (rhs)

Foreign exchange reserves continue to build up

Gross International Reserves, (US$ Billion)

Sound and Stable Banking System

State of Financial Inclusion in the Philippines

TARGET/ FORECAST 2013 4 1 percent US$4.4Bn

Enhancing Corporate Governance

Intensifying Efforts toward Financial Inclusion

Policy, Regulation and Supervision

Financial Education and Consumer Protection

Data and Measurement

Financial Inclusion Advocacy

Macroeconomic Outlook for 2013