TODAY

Enabling Business, Empowering Consumers

Prepared by the DTI Public Relations Office

Thursday, September 01, 2011

INDUSTRY AND INVESTMENTS

BEIJINGPresident Aquino on Wednesday urged Chinese businessmen to ride on the wave of
optimism in an emerging economic force in Southeast Asia that is the Philippine by investing in
tourism, agriculture and infrastructure at no other time than now. Addressing about 700 Filipino and
Chinese businessmen at the Philippines-China Economic and Trade Forum, Mr. Aquino said he is in
China in an attempt to balance the equation in commercial relations between the two countries,
which is currently in favor of China. Mr. Aquino sought to present a new Philippines under his watch,
where businessmen can expect a level playing field and ease in business transactions, while
contributing to the equitable and inclusive growth of Filipinos. The President cited encouraging
signs borne out of his holistic approach to economic development, among them, the Philippine stock
market hitting all-time highs seven times since he took over, and the Philippines four credit-ratings
upgrades during that time. I encourage you to ride on this wave of optimism. The time to put in place
strategic investments in tourism, agriculture and infrastructure is now, he said. Mr. Aquino urged the
businessmen to also seize opportunities under the governments Public-Private Partnership
Program. China is an economic powerhouse; I now invite the Chinese business community to take
part in this opportunity to invest in an emerging economic force in the Southeast Asia, he said.
(businessmirror.com.ph)

BEIJINGPresident Aquinos state visit to China is expected to generate anywhere from $2 billion to
$7 billion in quality investments in mining, energy, infrastructure and agribusiness, a Philippine trade
official said on Tuesday. Trade Undersecretary CristinoPanlilio also said in an interview with members
of the Philippine media at the Traders Hotel that a memorandum of understanding for a $1-billion joint-
exploration project in the South China Sea with China Petroleum will not be signed during the
Presidents visit. Panlilio said $2-billion to $7-billion range would be the ballpark figure. Panlilio said
the government has limited agreements to be signed in the presence of the President during his
China visit to eminent project proposals that are certain to push through and not dissipate later on.
We would like to focus on what could be concretized soonest, rather than signing so many MOUs
[memorandum of understanding] and then many of them would be what you call in Chineseampaw,
he said. While its easy to accept proposals, he said the government worked very hard to gather
serious investments. We only put together those that are eminent. These are the projects that we
are allowing to have MOUs, MOIs [memoranda of intention] whose signing the President will witness,
Panlilio said. (businessmirror.com.ph)

BEIJINGPresident Aquino on Wednesday renewed his call to China for a regional solution to the
territorial dispute in the West Philippine Sea during his very frank but very cordial one-on-one
meeting with President Hu Jintao. Presidential Spokesman Edwin Lacierda told reporters outside the
Great Hall of the People, the venue of the one-on-one meeting of the two leaders, that improved trade
and investment relations dominated the discussions but Mr. Aquino initiated brief exchanges on the
West Philippine Sea issue and the Northern Luzon Railway project. Lacierda said the discussion was
very frank but very cordial. He [Aquino] mentioned that we have differences but these differences
should not deter us from moving forward. The President also mentioned the position of the Philippine
government or the Philippine side, because this a regional problem, it requires a regional solution,
Lacierda said. The Chinese side responded by saying that they continue to hold their consistent
position that it should be resolved peacefully and they would encourage that...the South China Sea be
developed as a sea of friendship, peace and cooperation. There were no discussions on specific
mechanisms, but while Mr. Aquino didnt specifically state it, Lacierda said the President mentioned in
general terms our position on a rules-based regime. The President also mentioned that the West
Philippine Sea issue is not the be-all and end-all of China-Philippines relations, and so emphasized

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the multilevel relations that we have with China, he said. Lacierda also said Mr. Aquino raised the
Northrail project, which has been suspended because the Aquino administration believes it to be
disadvantageous to the Philippine government, and his counterpart agreed on the need to
reconfigure the project. (businessmirror.com.ph)

THE Philippines is further strengthening its tourist market in South Korea through promotional
activities to maintain its preferred tourist destination status. Outgoing Tourism Secretary Alberto Lim
said the Department of Tourism (DOT) is actively joining the 14th Busan International Travel Fair from
September 2 to 5 to entice more South Korean tourists and more investments in the tourism sector, as
well. As our best performer, the Korean outbound market remains one of our focal points for the
year, said Secretary Lim on Wednesday. New direct and charter air services have been crucial in
maintaining the upward trend, as have been our fruitful efforts in trade fairs where we have received
much positive feedback. He said the governments participation in the Busan tourism fair will allow
us to cement our status further as a preferred destination for Koreans. Busan is South Koreas
second-largest city and second-largest source of tourist for the country. The travel fair is expected to
attract 80,000 visitors from 30 countries this year. (businessmirror.com.ph)

THE government would need to sacrifice revenues and extend fiscal incentives to entice the private
sector to espouse green construction similar to what countries like Singapore are doing, local and
foreign experts said on Wednesday. To kick-start new schemes and projects that follow the green
concept, it is important to use incentives, Dr. Lim Siew Mei, director of Singapores Building and
Construction Authority, told the BusinessMirror. She noted that the Singaporean government, for
instance, incorporated the grant of several types of fiscal incentives in its green-building master-plan
that set a target of making 80 percent of the buildings in Singapore green by 2030. Part of the
program, Lim said, is a $100 million worth of incentives package offered to the private sector to retrofit
their existing buildings to improve energy efficiency. Singapore also came up with the Green Mark
Incentive Schemes and the accelerated tax-depreciation allowance for equipment under its fiscal
instruments to promote green construction. The government even rewards private individuals who
would plant trees and take care of them up to a certain period of time. Urban planner Felino Palafox
Jr., founder of Palafox Associates and president of the Management Association of the Philippines,
said the government would have to consider foregoing revenues to show that it is really serious in
contributing efforts to combat climate change. (businessmirror.com.ph)

THE COUNTRYS approved foreign direct investments (FDI) tripled in the second quarter, reflecting
increased investor confidence in the Philippines business climate. The value of FDI applications
approved by the Board of Investments, Clark Development Corp., Philippine Economic Zone
Authority, and Subic Bay Metropolitan Authority jumped to P40.6 billion from P13.8 billion in the
second quarter of 2010, bringing this years first half total to P62.6 billion, according to a report from
the National Statistical Coordination Board. The first half figure, however, is just 3.5% higher than the
P60.5 billion recorded in the same period last year. The second quarter increase is beyond
expectations although capital inflows have been growing by leaps and bounds for several months,
said University of Asia and the Pacific economist Cid L. Terosa in an email. He said the increase in
approved FDI reflected investors preference for emerging markets, as well as their confidence in the
countrys business climate. The better-than-usual business and economic prospects of the
Philippines have motivated investors to revisit the Philippines as an investment site. The approved
foreign investments in the second quarter are expected to generate 40,556 jobs. Japan was the top
source of FDI applications, with P17.5 billion in pledges or 43.2% of the total. It was followed by the
United States (P8.2 billion or 20.3%), and the Netherlands (P7.2 billion or 17.7%). More than 65% of
the committed FDI or P26.4 billion was intended for manufacturing projects. Other sectors that

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received high investment commitments were real estate (P5.2 billion or 12.8%), and electricity, gas,
steam, and air conditioning supply (P4.8 billion or 11.9%). (bworldonline.com)

INTERNATIONAL AND DOMESTIC TRADE

A BILATERAL MEETING between President Benigno S. C. Aquino III and his Chinese counterpart Hu
Jintao resulted in the signing of several agreements and two exchanges of letters, Malacaang
yesterday said. On the first leg of this weeks state visit to the Peoples Republic of China, Mr. Aquino
also spoke at a trade forum and enjoined the Chinese business community -- including officials of four
companies that he personally met with -- to invest further in the Philippines. The bilateral meeting,
said Presidential Spokesperson Edwin Lacierda, was dominated by discussions on the promotion of
trade and investment ties. Both heads of state, however, also touched briefly on contentious issues
such as the delayed North-Luzon Railways Corp. (NorthRail) project and the conflicting claims in the
South China Sea. A joint statement on the latter will soon be issued and Mr. Lacierda described the
discussions as being "very frank but very cordial." "President Aquino initiated it, and he mentioned that
they had differences, but these differences should not deter us from moving forward," Mr. Lacierda
told reporters in an interview aired over state-run radio station dzRB. He said Mr. Aquino took the
position of a "rules-based regime" but noted that "[as] this is a regional problem, it requires a regional
solution." Mr. Hu, meanwhile, adhered to the Beijings position that the conflict "should be resolved
peacefully" and that they would encourage that the South China Sea be developed. "Both sides were
very positive in addressing the issue of the South China Sea," Mr. Lacierda said, adding that the
dispute was not the "be-all end-all of Philippines-Chinese relations". In the case of the NorthRail
project, he said Mr. Aquino proposed that it be "reconfigured," to which Mr. Hu agreed. "Both sides
directed their officials concerned with the project to resolve the issue," Mr. Lacierda said.
(bworldonline.com)

Philippines cigarette exports to Thailand were estimated to reach $200 million in 2010 and could
further grow with the favorable ruling by the World Trade Organization on tax issue on the countrys
cigarette exports. Trade and Industry undersecretary Adrian S. Cristobal said this as he cited the
contribution of the world trading body in the growth of the countrys exports. The Philippine
membership to the World Trade Organization (WTO) has helped the countrys trade expand in the
global market, said Cristobal. WTO provides a dispute settlement mechanism to resolve trade issues
and concerns among its member states. The rules-based trading system provides due process for
trade disputes. For instance, Cristobal noted that the Philippines is the No. 1 imported cigarette
supplier of Thailand. In 2010 alone, the Philippines had around 2/5 share of the Thai domestic market
and that figure has steadily risen since 1990. Philippine exporters estimate its share of the $849
million Thai domestic cigarette market at around $200 million. The recent Philippine victory in the
cigarette case with Thailand shows that the WTO upholds fairness and transparency in trading
practices among countries, while securing jobs and investments, he said. It can be recalled that for
the past years, the Philippines for example faced discriminatory treatment of its cigarette exports to
Thailand. This involved customs valuation and fiscal as well as health measures that prevented
Philippine cigarette exports to compete fairly in the Thai domestic market. In 2008, the Philippines
requested consultations, filed a dispute settlement case, and recently obtained a favorable ruling. To
date, the Philippines is appealing a recent WTO ruling on its excise taxation of distilled spirits. The
distilled spirits industry is an important sector in the Philippines. It employs half a million people
directly and about five million indirectly. In 2010, it contributed about US$1 billion to the economy.
(mb.com.ph)

The Philippine membership to the World Trade Organization (WTO) has helped the countrys trade
expand in the global market, the Department of Trade and Industry (DTI) said yesterday. Latest data

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show that the Philippines is ranked 55 in merchandise exports and 45 in terms of imports as of 2009
WTO Trade Profiles. In terms of commercial services, the country is ranked 48 in exports and 55 in
terms of imports. The WTO constitutes a set of international trade rules applied by all its members. It
provides its members fair and non-discriminatory treatment, transparency, and predictability in
international trade. Moreover, the WTO under its special and differential (S&D) treatment allows
members like the Philippines sufficient leeway to implement the rules in a manner less than fully
reciprocal when compared with developing Members. DTI said they recognize the importance of the
WTO as an institution that has maintained a stable international trading system as it remains
instrumental in promoting fair trade and the recent Philippine victory in the cigarette case with
Thailand shows that the WTO upholds fairness and transparency in trading practices among
countries, while securing jobs and investments. (philstar.com)

CONSUMER WELFARE AND TRADE REGULATION

POWER consumers may have to shell out more in settling their monthly electricity consumption bill
following the filing of yet another rate-adjustment petition by the National Power Corp.-Small Power
Utilities Group (Napocor-Spug) with the Energy Regulatory Commission (ERC). In its petition,
Napocor-Spug sought an additional adjustment of at least 6.93 centavo per kilowatt-hour (kWh). The
additional cost will enable Napocor-Spug to continue its operations in remote areas, assure
continuous fuel shortage supply and avoid possible shutdown of power plants. The Napocor-Spug
has been recently granted by the ERC a provisional authority to collect an additional 7.09 centavo per
kWh from consumers through the universal charge for missionary electrification (UCME). To date,
Napocor-Spug collects 11.63 centavo per kWh from consumers through the UCME. It also asked the
ERC for the approval of the return-on-rate base (RORB) to allow it to guarantee continuous operation
in remote areas. The Napocor-Spug said the provisional authority did not provide for the 12 percent
RORB that would allow for at least two months cash working capital for unrecovered operating
expenses and for capitalized maintenance expenses of generating plants. The Napocor-Spug justified
that its financial capability of sustaining its operations will be drastically impaired without a reasonable
RORB. Napocor-Spug added it paid new power providers (NPP) with a total subsidy amounting to
P693.6 million last year that resulted in a deficit of P334.6 million from the approved amount of P310
million for the same year. (businessmirror.com.ph)

Pilipinas Shell Petroleum Corp. (Pilipinas Shell) has reduced the price of its liquefied petroleum gas
(LPG) product by P1.20 per kilogram (kg), or by P13.20 per 11-kilogram cylinder. No price
adjustments were, however, made for auto LPG. Thus Shellane, the LPG brand of Pilipinas Shell, will
cost between P717 to P744 per 11-kilogram cylinder. Petron Corp., Liquigaz and Total Gas have not
issued any formal advisories but hinted that they may not be too far from the Shellane price range.
Meanwhile, the LPG Marketers Association of the Philippines (LPGMA) said that its members would
likewise reduce prices of LPG. However, they refused to give further details until they get the final
contract price from the Asian market. Based on available data, LPG contract price in July was $843
per metric ton (MT). It rose to $870 per MT in August. Curiously, the Mean of Platts Singapore
(MOPS) indicated that the price of gasoline in the region rose from $122 per barrel on Aug. 22 to $126
per barrel on Aug.29. (philstar.com)

The Department of Health (DOH) said yesterday that there is still no cause for alarm over the mutant
strain of bird flu virus (H5N1) found in some poultry farms in northern and central Vietnam, adding that
the Philippines remains free from bird flu. We are still bird flu-free. The problem is on the poultry.
There is no sustained human-to-human transmission. What (we) have is animal-to-human
transmission, said DOH Assistant Secretary Dr. Eric Tayag. But Dr. Lyndon Lee Suy, program
manager of the DOHs Emerging and Re-emerging Diseases, advised the public not to be complacent
because the threat of bird flu has always been there. The public should strengthen their resistance

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and immune system so that they can fight off infection.They should always observe cough manners
and proper hand washing, Lee Suy added. The United Nations Food and Agriculture Organization
had sought intensified readiness and surveillance against possible major resurgence of H5N1 amid
signs that a mutant strain is spreading in Asia and beyond with unpredictable risks to human health.
According to Tayag, the government is cautious of migratory birds that may bring the virus to the
country. Migratory birds usually come to the Philippines during the months of October to February. It is
not yet known if the mutant strain in animals will affect the anti-H5N1 vaccines for humans.
(philstar.com)

CORPORATE
BEIJINGJG Summit Holdings Inc. President and Chief Operations Officer Lance Gokongwei
remains optimistic the government would approve the deal between the Digital Telecommunications
Philippines Inc. (Digitel) and Philippine Long Distance Telephone Co. (PLDT), despite the lapse of the
August 26 deadline set by PLDT Chairman Manuel V. Pangilinan for a decision on it. In an interview
with reporters at the sidelines of the Philippines-China Economic and Trade Forum, Gokongwei said
he was confident the government would see that the deal would ultimately benefit Filipino people. But
he stressed Digitel would survive without the merger. Weeks ago, Pangilinan also said the same;
PLDT will not die without the deal, he said. In the interview, Gokongwei also said officials of both
firms have decided to return to their respective boards to seek direction on the next step to take. I
think both PLDT and Digitel have agreed that they would revert to their board of directors on what the
next steps are. Well probably know more in the next few weeks or months, he said. He described
the deal as a very complex issue affecting multiple stakeholders, including the companies and
consumers, but nonetheless I think all parties have to work toward achieving some closure on this. I
think all parties are still trying to dissect in coming out with a solution that works for all, added
Gokongwei, a member of the business delegation that joined President Aquinos state visit to China.
He said the boards of the two companies may meet after the Presidents China trip. Mr. Aquino
himself had voiced concerns about monopoly issues but Gokongwei maintained that his optimism is
anchored on his belief that the deal makes sense, especially for the public. (businessmirror.com.ph)

Pancake House Inc. is buying 100 percent of the Yellow Cab pizza chain for P800 million in an all-
cash transaction, its top official said on Wednesday. The deal, which is expected to be completed in
30-days, will allow Pancake House to take over the 10-year old pizza chains 82 storesof which
more than 80 percent are company-owned. In a briefing on Wednesday, Pancake House chairman
and chief executive officer Martin Lorenzo said financing for the transaction will involve internally
generated cash and a credit facility of up to P800 million with Metropolitan Bank and Trust Co.
Lorenzo pointed to the companys growth potential in the medium- to long-term, as well as premium
branding, and the financial discipline exercised by its founders. We are looking at digesting [the
Yellow Cab acquisition] over the next 18 to 24 months. After that, we can look again [for new buying
opportunities], Lorenzo said. The investment marks Pancake Houses first major acquisition since
taking over the Le Coeur de France caf chain in 2008. The move also follows Pancake Houses
unsuccessful bid to buy grilled chicken chain Mang Inasal last year, Lorenzo revealed. A 70-percent
stake in Mang Inasal was instead acquired for P3 billion by Jollibee Foods Corp., the countrys biggest
fast-food company. Lorenzo said Pancake House remains on the lookout for new acquisitions,
although target companies should have annual revenues of at least P1 billion. Yellow Cab posted
P1.5 billion in system-wide sales, which includes franchised stores, in 2010 while earnings before
interest, taxes, depreciation, and amortizationor Ebitda, a measure of cash flowamounted to
P161 million. (businessmirror.com.ph)

Manila Water Co. Inc. is selling its stake in an Indian joint venture company established to develop
projects in that country. In a filing to the Philippine Stock Exchange on Wednesday, Manila Water said

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it is selling its shares in JITF Manila Water Development Co. Ltd. to JITF Water Infrastructure Ltd.
The sale of the shares of stock of Manila Water in the JV company to JITF Water will allow both
Manila Water and JITF Water to freely pursue any business activity in India, Manila Water said in the
disclosure, without providing additional details. Manila Water also has another joint-venture
agreement with Indias Jindal Water Infrastructure Ltd., through Jindal Manila Water Development Co.
Both parties under the agreement committed to explore opportunities in the water sector in three
states of India, namely Rajasthan, Gujarat and Maharashtra. (businessmirror.com.ph)

AYALA Land Inc. (ALI) is formally launching its fifth residential brand to target the socialized housing
segment, where homes will cost no more than P400,000. ALI told the Philippine Stock Exchange on
Wednesday that its board approved the plan to be pursued by subsidiary South Maya Ventures Corp.
ALI chief financial officer Jaime Ysmael said earlier this month that the new brand will be called
Buena Vida. The pilot project will be launched via a 10-hectare lot in General Trias, Cavite within the
last quarter of 2011, ALI added. The project will offer an initial 2,000 units. The listed builder already
caters to the upscale and middle-income markets through Ayala Land Premier and Alveo Land Corp.,
respectively. It also has units catering to the affordable markets through Avida Land Corp. and Amaia
Land Corp. Strong sales across all its brands have helped net income in the six months to June grow
more than a third to P3.38 billion. Revenues were also up 15 percent to P21.25 billion.
(businessmirror.com.ph)

BEIJINGFilipino-owned Liwayway China Co. Ltd. may go public next year at the earliest, if the
study being conducted by the makers of popular snack brand Oishi supports it. Liwayway
Manufacturing Corp. (LMC) chairman emeritus Carlos Chan said on Wednesday that the company is
set to open two new facilities in China by next year, and two more in India and Cambodia. Chan, who
is LMC founder, attended the Philippines-China Economic and Trade Forum held in time for President
Aquinos state visit. It [pulic listing] is under study.The earliest would be next year, Chan said,
adding that hopefully the [market] situation would be better by that time. Chan said the plan has
been on the drawing board for quite some time but has been delayed. He, however, said there are
no plans to go public in the Philippines. Chan said Liwayway China is expected to post a 30-percent
growth in sales this year and that there are two facilities under construction and may be operational by
next year, each costing an estimated $10 million. One is a seven-hectare printing plant for the
companys packaging requirements in Jiangxi, and the other is a production plant for snack food in the
Jinan capital of Shandong. Chan said the China market is good this year and that Liwayway China
expects an increase of 30 percent in sales in 2011 compared [with] 2010. This year, our target is at
a conservative $350 million, he said. On expanding operations to other countries, Chan said LMC is
constructing plants in India and Cambodia, to be operational before the end of the year.
(businessmirror.com.ph)

Philex Mining Corp., a unit of First Pacific Co. Ltd. of Hong Kong, is looking at gold and copper
ventures in Indonesia. Philex chairman Manuel Pangilinan said the mining company planned to buy
more mining assets after making two recent acquisitions. Pangilinan said the company was looking at
Indonesia as possible area of expansion for gold and copper. Philex and Manila Mining in May agreed
to explore and jointly develop the Kalayaan copper and gold project in Placer, Surigao del Norte. The
project is covered by an exploration permit issued to Manila Minings unit, Kalayaan Copper Gold
Resources Inc. Philex bought 125,000 shares of Kalayaan Copper for $25 million, representing a 5-
percent interest in the project. It will get an additional 55-percent interest in the Kalayaan project when
it pays all pre-development expenses, including a final feasibility study. Philex also bought a 5-percent
interest in Lepanto Consolidated Mining Co. for P1.43 billion, giving it an indirect interest in the Far
Southeast Gold Project in the northern province of Benguet, where Lepanto has a 40-percent stake.
(manilastandardtoday.com)

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RICE producer SL Agritech Corp. plans to set up a plantation in Cambodia via a joint venture instead
of shipping out produce from its Philippine farms, a ranking official said last week. We are looking at
starting the shipment of seeds to Cambodia and to start planting there in the fourth quarter, SL
Agritech President Henry Lim Bon Liong said in a telephone interview. Under the joint venture, he said
seeds will be given by SL Agritech to be used for the plantation, while its partner firm will provide the
labor and land in Cambodia. He said that for every produce sold there, SL Agritech will be paid with
royalties. The firm is focusing on international development this year with not much push from the
Philippine government for hybrid rice, he said. Apart from Cambodia, the firm is also reportedly
looking at Myanmar as part of its international development program. We are in talks with a firm in
Myanmar. We are studying what model we will do, if we will just export seeds to be sold there or if
there could be a plantation there [for seed production], he said. SL Agritech hopes to finalize the
discussions with the Myanmar-based firm before the end of the year. This is on top of existing
plantations for the development of hybrid seeds in Indonesia and Bangladesh. (bworldonline.com)

BANKING AND FINANCE

Land Bank of the Philippines said net income in the first seven months of the year surged 25 percent
year-on-year, led by an increase in loans and production investments during the period. LandBank
president and chief executive Gilda Pico said the bank posted a profit of P6.2 billion in the first seven
months of 2011, up from P5 billion a year ago. That made LandBank one of the most profitable banks
in the country, she said. Pico said the seven-month figure was also on track of topping the banks full-
year income target of P8.5 billion for 2011. Definitely, we will exceed that, Pico told reporters over
the weekend. The banks seven-month profit translated into a return on investment of 17.7 percent,
which would be favorable to the government coffers. LandBank, which sends half of its profit to the
national government, remitted P4 billion out of its P8.1-billion earnings to the national treasury in
2010. Loans and investments led the growth in the profit, with investments rising 16 percent year-on-
year. Outstanding loans as of July reached P245 billion, up 18.6 percent from P205 billion during the
same period in 2010. (manilastandardtoday.com)

GENERAL ECONOMY
Efforts by the government to catch up on its infrastructure spending in the second quarter fell short as
public construction was again cited as a major factor that contributed to the slowdown in the countrys
economic growth to only 3.4 percent. On Wednesday the National Statistical Coordination Board
(NSCB) said the less than desirable growth was less than half of the 8.9-percent growth in the same
period last year and sent growth in the first half of 2011 plummeting to only 4 percent. Revisions in
the first-quarter figures also saw growth down to 4.6 percent from the initial estimate of 4.9 percent.
On the demand side, the growth came mainly from consumer spending as fixed capital formation,
particularly construction, has not really felt the promise of the Public-Private Partnership Program,
while external trade has been lackluster at best, NSCB Secretary-General Romulo Virola said in a
statement. The growth in the second quarter was well below the expectations of economists, as well
as the National Economic and Development Authority (Neda), which estimated growth at around 4.5
percent to 5.5 percent. The median estimate of seven economists surveyed by Bloomberg News was
for expansion to ease to 4.1 percent. There is a need to implement policies to help growth recover,
which includes attracting more investments, keeping interest rates low, said Antonio Espedido, a
treasurer at China Banking Corp. Its a tough juggling act but it seems growth is the bigger problem
now, not inflation. John Forbes, senior adviser of the American Chamber of Commerce of the
Philippines, said the second-quarter result is quite disappointing although he recognized the subpar
performance was also due to external factors. But I am hopeful the second half of this year will see
higher growth than in the first quarter, when the government was underspending and there were
adverse external events in Europe, Japan and the United States, Forbes said. Trade Secretary

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Gregory L. Domingo expected the GDP growth to fall below 5 percent because of the weaker-than-
expected exports, particularly for the electronics industry. That is why I expect some weakness in the
GDP for the second quarter. But in the second half, electronics is expected to recover, Domingo said.
(businessmirror.com.ph)

THE BUREAU of Internal Revenue (BIR) has tightened the rules governing the improperly
accumulated earnings tax (IAET) to ensure that corporations declare their incomes and distribute
dividends to shareholders. The BIR narrowed the definition of "paid-up capital," which sets the limit of
how much income a company can retain for the "reasonable needs of the business." Everything else
must be declared as dividends to shareholders or it will subject to a 10% IAET. "The amount that may
be retained ... shall be 100% of the paid-up capital or the amount contributed to the corporation
representing the par value of the shares of stock," Revenue Memorandum Circular 35-2011, dated
August 17, states. Any excess capital over and above the par shall be excluded, and therefore must
be part of the income declared as dividends. Additional paid-in capital is now removed from the
equation, Punongbayan & Araullo tax advisory and compliance division head Eleanor L. Roque said.
"Now that its not part of the paid-up capital, companies can retain less income and distribute more
dividends for their shareholders," Ms. Roque explained. (bworldonline.com)

The House of Representatives will start next week plenary deliberations on the proposed P1.816-
trillion national budget for 2012, the chairman of the House committee on appropriations said
yesterday. Cavite Rep. Joseph Emilio Abaya, chairman of the panel, said he is hoping that the
General Appropriations Bill (GAB) would be passed on second reading on Sept. 16 after extensive
discussions on the floor. He said debates on the budget would start early at 10 a.m. on Sept. 6 and all
House members may participate in dissecting the budget. Committee hearings on the proposed
money measure were quick after they started early last month. President Aquino submitted his
expenditure program to Congress the day after he delivered his State of the Nation Address on July
25. Members of the House minority bloc led by Albay Rep. Edcel Lagman, who earlier boycotted the
committee hearings on the budget proposals of various agencies, are expected to come in full force to
block what they called were misplaced allocations in the GAB. We will welcome all the scrutiny of the
minority because that will air out everything to further understand and improve on the budget. Will just
study well and prepare so we can mutually scrutinize the budget constructively, Abaya said in a text
message. (philstar.com)

Budget and Management Secretary Florencio Abad said yesterday the government may front-load
projects for implementation next year this second semester to boost economic growth. Abad said this
was on top of the catching up they would do with government spending targets this year. We intend
to further increase spending not only by accelerating existing projects but also by spending on
additional projects allowed by the available fiscal space brought about by significant savings we have
attained, he said in a statement. Among the additional projects being considered are the hiring of
nurses and healthcare workers; rural electrification projects; infrastructure for agrarian reform;
aquaculture support; on-site housing and resettlement; local roads connecting to national roads; farm-
to-market roads and additional national roads and bridges, he said. He noted that the plan to catch up
on spending has been working as seen in the level of disbursement in July, the highest so far
recorded this year. Government spending in July amounted to P133.45 billion, the highest monthly
spending level attained so far this year. The amount is 1.59 percent lower than P135.60 billion
recorded in July last year. We intend to further increase spending not only by accelerating existing
projects but also by spending on additional projects allowed by the available fiscal space brought

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 TODAY
Enabling Business, Empowering Consumers

Prepared by the DTI Public Relations Office

Thursday, September 01, 2011
about by significant savings we have attained, he said. Abad said slower disbursements and difficult
global conditions dampened economic growth in the first two quarters of the year. Socioeconomic
Planning Secretary Cayetano Paderanga said the government needs to accelerate infrastructure
spending to mitigate the ill effects of weak global economic recovery and other external shocks. He
noted this was priority after Philippine gross domestic product (GDP) grew below government and
market expectations in the second quarter of the year. Well catch up with our spending program.
(philstar.com)