Economy & Trade

Biomass Industry in the Philippines

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Op-ed by Bob Shead

This article will attempt to describe the economic advantages and environmental efficiencies of biomass power generation in the Philippines.  The biomass industry in the Philippines, while still far behind fossil fuel-based power generation, is rapidly advancing.  The term biomass normally refers to biological material that can be used as fuel.  It can be something as simple as a wooden log or more complex like alcohol.  Biomass for millennia has been the primary energy source on the planet. Although it is considered that all fossil fuels such as coal and oil originate from vegetation, they are excluded from the definition of biomass.

Sources of Biomass in the Philippines

The Philippines has large and abundant supplies of biomass resources, including agricultural crop residues, forest residues, animal waste, agro-industrial waste, municipal solid waste and aquatic biomass.  The most common agricultural waste are rice hull, bagasse, coconut shell husk and coconut coir.  This use of commercially produced agricultural residues converted into biofuels is increasing in the Philippines, as fossil fuel prices continue to rise.  Rice husks are perhaps the most important underdeveloped biomass resource that can be fully utilized in a renewable and sustainable manner for generation of electrical power.

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ASEAN Market Watch: Thailand GDP Growth, Malaysia Manufacturing Sector, and Singapore Retail Sales

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Thailand: First quarter GDP growth fastest in four years

The Thai economy recorded its fastest growth in four years during the January-March 2017 period. This has been propelled by stronger exports, consumption and growth in tourist arrivals despite weaker private investment and public funding. According to a poll conducted by Reuters, gross domestic product (GDP) is expected to have expanded a seasonally-adjusted 1.2 percent in the January-March period from the previous quarter, when growth was 0.4 percent – the best pace since the final quarter of 2012. As per the poll, growth is expected at 3.3 percent in 2017, up from 3.2 percent in the previous year.

According to data from Thailand’s central bank, exports grew at 6.6 percent in January-March, private consumption at 2.9 percent and farm income grew at 20 percent. Exports comprise about two-thirds of the Thai economy. Tourist numbers rose to 9.2 million in the January-March period from 7.8 million in the previous quarter, when some tourism-related entertainment activities were curtailed following the death of King Bhumibol Adulyadej in October 2016.

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ASEAN Growth to Remain Resilient Despite Regional Vulnerabilities

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By Bradley Dunseith

In April, 2017, the World Bank (WB) released their biannual East Asia and Pacific Economic Update, entitled, “Sustaining Resilience.” As the title suggests, the WB anticipates growth in East Asia and Pacific, including ASEAN states, to remain resilient despite risks from global and regional vulnerabilities. In this article, we go through “Sustaining Resilience” and summarize the WB’s forecast for developing ASEAN states generally as well as their country specific predictions for economic growth.

About the report

The WB predicts that large developing economies will continue to grow moderately while smaller regional economies will benefit from the rapid growth of their neighbors as well as high commodity prices. The WB marked that poverty has continued to decline in most countries and will continue to fall with sustained growth and rising labor incomes. However, the WB report noted that global policy uncertainties means that countries must address macroeconomic vulnerabilities so as to prepare for external shocks to the economy. External shocks – such as changes in US policy – disproportionately affect smaller countries; as such, the WB report strongly recommends small economics to improve the efficiency of their public spending in preparation of needed structural changes.

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The Philippine Economic Zone Authority – Incentives and Assistance

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Op-ed by Bob Shead

The Philippine Economic Zone Authority (PEZA) is a Philippine Government agency, attached to the Philippine Department of Trade and Industry, and is the agency tasked to promote investments, extend assistance, register, grant incentives to and facilitate the business operations of investors in export-oriented manufacturing and service facilities inside selected areas throughout the Philippines, known as PEZA Special Economic Zones.

PEZA oversees and administers Philippine tax exemptions, and other beneficial incentives to foreign investors, developers and operators of, ready to occupy, environmentally friendly, secure and competitively priced Special Economic Zones (see below for a list of Philippine Economic Zones).  PEZA also assists investors who locate in service facilities inside selected areas in the country (areas named as PEZA Special Economic Zones); these are usually Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO) companies.  Other activities also eligible for PEZA registration and incentives include establishment and operations within the Special Economic Zones for tourism, medical tourism, logistics and warehousing services, economic zone development and operation and facilities providers.

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Labuan: Offshore Opportunities in Malaysia

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By Bradley Dunseith

Labuan is an offshore, Malaysian island, which has the benefit of low tax regimes while still retaining the protection of Malaysia’s laws and regulations. This means Labuan entities benefit from nearly all the Double Taxation Agreements (DTAs) Malaysia has signed with over 70 countries while profiting from tax exemptions under the Labuan International Banking and Financial Center (IBFC).

Considered the ‘pearl of Borneo,’ Labuan is located off the coast of the eastern Malaysian state of Sabah and borders Brunei by sea. The territory is strategically located in close geographical proximity to financial capitals like Hong Kong, Jakarta, Kuala Lumpur, and Singapore. Labuan is technically comprised of seven islands – Labuan Island proper and six smaller satellite islands – and enjoys tropical weather. Labuan offers multiple ferry connections to mainland Malaysia and Brunei; its airport is served by two daily flights to Malaysia’s capital Kuala Lumpur and one daily flight to Kota Kinabalu, the Sabah state capital. The island has a deep sea port and is planning to further develop its airport. 

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ASEAN Market Watch: Singapore Innovation Fund, Philippines Credit Rating, and Myanmar Tourism

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Singapore: Innovation fund created to fuel growth

As part of its bid to fuel economic growth, Singapore’s government is setting up a S$1 billion (US$718 million) fund to help innovative companies to develop their businesses and expand overseas. Billed as the Makara Innovation Fund, the project is a collaboration between the Intellectual Property Office of Singapore (IPOS) and local private equity firm Makara Capital. According to IPOS, the fund will invest S$30 million (US$21.5 million) to S$150 million (US$107.5 million) each in 10 to 15 companies with globally competitive technologies over the next eight years.

According to Bloomberg’s 2017 innovation index, Singapore ranked sixth ahead of the U.S. and Israel. According to Bloomberg estimates, Singapore has the third-largest number of patents granted per one million inhabitants, trailing only South Korea and Japan. As per latest available data from 2015, Singapore had 10,814 applications for patents, the largest number of any Southeast Asian nation, according to the World Intellectual Property Organization. According to IPOS, the agency plans to double the number of intellectual property experts in Singapore to 1,000 over the next five years and will train 4,000 people a year. It will also assist companies in using intellectual property as collateral for financing. IPOS expects these initiatives to add about S$1.5 billion (US$1.07 billion) in value to Singapore’s economy over the next five years.

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Thailand’s Eastern Economic Corridor – What You Need to Know

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By Bradley Dunseith

With the Eastern Economic Corridor (EEC), Thailand hopes to develop its eastern provinces into a leading ASEAN economic zone. The EEC straddles three eastern provinces of Thailand – Chonburi, Rayong, and Chachoengsao – off the coast of the Gulf of Thailand and spans a total of 13,285 square kilometers. The government hopes to complete the EEC by 2021, turning these provinces into a hub for technological manufacturing and services with strong connectivity to its ASEAN neighbors by land, sea and air.

The government expects US$43 billion (Thai Baht 1.5 trillion) for the realization of the EEC over the next five years. This funding will come from a mix of state funds, public-private partnerships (PPPs), and foreign direct investment (FDI). The government has identified four “core areas” essential in making the EEC a renowned economic zone: (1) increased and improved infrastructure; (2) business, industrial clusters, and innovation hubs; (3) tourism and; (4) the creation of new cities through smart urban planning. The government predicts the creation of 100,000 jobs a year in the manufacturing and service industry by 2020 through the EEC.

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The Philippines and Hong Kong – Trade and Economic Relations

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Op/ed by Bob Shead

Hong Kong is the nearest major international city to Manila, and just one and half hour away by flight from the Philippine capital.  The related sea trade routes, across the South China Sea, are always busy and form part of the China Economic Silk Route.  Since the handover of Hong Kong to Mainland China in 1997, the territory has maintained its trade and economic separation from China, under the 50 year, One Country Two Systems, handover agreement.

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ASEAN Market Watch: Philippines FDI Surge, Malaysia Construction Sector, and Laos Tourism Industry

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The Philippines: Fresh FDI surge registered

According to figures released by the Philippines’ central bank, Bangko Sentral ng Pilipinas, the country registered US$685 million in fresh Foreign Direct Investment (FDI) in January, a 13.2% increase from US$605 million registered over the same period in the previous year. The foreign capital received in January is also the highest monthly FDI inflow since a US$744 million FDI inflow in November 2016. The central bank has stated that the fresh FDI surge comes as investors remain optimistic on the growth potential of the country’s economy, which is backed by strong macroeconomic fundamentals.    

The Philippines economy, with an upwardly adjusted 6.9% growth rate, was one of the fastest growing markets in Asia in 2016. Industry watchers and economists have credited the country’s growth successes to large foreign currency reserves and a sound banking system. According to the central bank, the top sources of FDI at the beginning of the year were Germany, Singapore, Hong Kong, the United States, and Japan. Among the largest recipients of foreign capital are electricity, gas, steam and air conditioning supply; construction; wholesale and retail trade; administrative and support service; and financial and insurance services sectors. The central bank expects FDI to reach at least US$7 billion by the end of this year.

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Business Process Outsourcing in The Philippines

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Op/ed by Bob Shead

The Philippines Department of Trade and Industry (DTI) defines BPO as the “delegation of service-type business processed to a third-party service provider.”  The industry is generally divided into the following sectors:  Contact centers, back office services, data transcription, animation, software development, engineering development and game development.

BPO in the Philippines is becoming a key developing industry, primarily due to the relatively low cost of living, and a workforce which composed mainly of young and educated Filipinos with good spoken English language skills.  The majority of international research and data companies have placed the Philippines as the no 1 trending country as the top outsourcing destination.  In 2015, the Philippines replaced Mumbai as the 2nd ranking BPO destination and will in all likelihood continue to maintain a high position in the Top 10 worldwide outsourcing destinations (dominated mostly by Indian cities) in 2017.

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