According to Aquino, “The answer to our lack of funds are new and creative ways to address long standing problems. There are a number of investor groups that have expressed interest and confidence in the Philippines. This is the solution: public and private sector partnerships.” He adds that his government plans to shorten the process of build-transfer-operate (BOT) programs in the Philippines, to ensure that foreign and local investments from the private sector would be able to address growing infrastructure problems, and create more job opportunities for the local workforce.

Established by President Aquino under Executive Order No. 8, a Public-Private Partnership Center was recently set-up in the Philippines, to provide assistance to local government units and their attached agencies in the implementation of different projects, as well as to recommend implementation policies, monitor projects, and manage funding under the Project Development and Monitoring Facility. Says Executive Secretary Paquito Ochoa Jr, “This executive order is just the first of many steps this administration will take to provide our people with the infrastructure they need, the infrastructure required to make our country more attractive to investors.”

The private sector is also doing its part in promoting public-private partnerships in the Philippines: the Philippine Constructors Association (PCA), the PCA Foundation Inc. (PCAF), the Bankers Association of the Philippines (BAP), the Investment Houses of the Philippines (IHAP), and the Research, Education, and Institutional Development (REID) Foundation recently signed a Memorandum of Cooperation forming a public-private partnership (PPP) coalition geared toward assisting the Aquino administration in the successful implementation of PPP projects for infrastructure. The coalition is prepared to provide funding, resources and expertise to assist local governments in their respective infrastructure projects. 

According to Gregory Kittelson of  Philippines Business Consulting Firm  Kittelson & Carpo Consulting, “Public-private partnerships not only promise to restore investor trust in a government once plagued by allegations of corruption, it also enables us to take advantage of the private sector’s expertise in developing lasting, quality infrastructure for public benefit.” 

SOURCES:

AmCham Journal October 2010 (Promoting Public-Private Partnerships in Infrastructure Development, Enrico Basilio, Jeremiah Acena, Rafael Hernandez, et. al)

http://online.wsj.com/article/SB10001424052748703700904575390802484639706.html (Philippines’ Aquino Seeks Public-Private Partnership, Cris Larano, Wall Street Journal Online)

http://www.abs-cbnnews.com/business/09/12/10/aquino-issues-eo-8-creating-public-private-partnership-center  (Aquino issues EO 8 creating Public-Private Partnership Center, abs-cbnNEWS.com)

(Philippines' Aquino: To Pursue Public-Private Partnership To Boost Economy, Cris Larano, Dow Jones Newswires; 632-848-5051;cris.larano@dowjones.com) 

In 2009, the country’s Agriculture, Fishery, and Forestry (AFF) sector contributed to about 15% of the Philippines’ national gross domestic product (GDP). Projections from the International Monetary Fund (IMF) puts the Philippines’  2011 GDP growth rate at 5%, having already risen by 7.5% in the first nine months of 2010. The Philippine Agricultural sector is also expected to grow by at least 2.5-3.5% in 2011. According to Dr. Rolando Dy, an agricultural specialist from the University of Asia and the Pacific (UA&P), harvests from the final quarter of 2010 are likely to spill over to the first quarter of 2011, while crops like rice, corn, and banana are expected to continue as top performers in the next year.

Data and statistics from “Project JobsFit:The Dole 2020 Vision”, a recent labor market study conducted by the Philippine Department of Labor and Employment (DOLE), predicts that agribusiness will emerge as a key employment generator in the next five to ten years. Criselda Sy, director for local labor, says that the agribusiness sector boasts a number of, “hard to fill in demand posts.”

A number of recent developments in the Philippine Agribusiness sector have already boosted investor interest in the industry. Philippine-based company AgriNurture, a local producer of farm goods, recently undertook Php 1.7 billion worth of agribusiness projects with the Chinese government of Guangxi province, and is currently negotiating the export of vegetables and other commodities to the United States. Thailand-based company Charoen Pokphand (CP) Foods has also invested Php 1 billion in a hog production facility in Concepcion, Tarlac.

Prospective growth for the industry is evident; the Philippines’ agricultural resources include 29.81 million hectares of agricultural land, and 5.7 million hectares of arable land; however, only about 27.19% of the Philippines’ total agricultural land have proper irrigation systems. Lack of development in these areas has led to a significant decrease in crop production, with rice harvests experiencing a 25% shortfall in 2008. Crop production also contracted by 7.24% in 2010, with palay and corn production dropping by 14.95% and 15.39% respectively, and registered losses in coconut and sugarcane farms. Philippine agribusiness bounced back in other areas, nonetheless, particularly in livestock and poultry, fisheries and bio-fuel development.

The livestock sub-sector grew by 1.07% in 2010, and accounted for 12.74% of the Philippines’ total agricultural production. Both carabao and dairy production boasted significant gains at 3.6% and 14.59% respectively, while hog production rose by 0.77%. The livestock sub-sector grossed a total amount of Php 152.1 million, registering a 9.44% increase from 2009. The poultry sub-sector, on the other hand, rose by 3.01% in 2010, and had a 15.53 percent share in the Philippines’ total agricultural output. Production gains from both chickens and chicken eggs, at 2.82% and 5.87% respectively, also contributed to the sector’s overall growth performance. Poultry production grossed a total amount of Php 113.2 billion, about 7.10% higher than 2009 levels.

The fisheries sub-sector, on the other hand, inched up by 0.69% in 2010, and contributed a 27.37 percent share to the country’s total agricultural output. Production increases at municipal fisheries and aquaculture were recorded at 0.53% and 1.91% respectively, while production at commercial fisheries declined by 1.79%. The sub-sector grossed a total amount of Php 163.6 billion, a 1.81% increase from 2009 levels.

Bio-fuel development in the Philippines is also attracting a large number of foreign and local investors, thanks in part to the country’s “attractive investment sites for bio-fuel projects”, this according to Chris de Lavigne, the Global Vice President of US-based company Frost & Sullivan. In fact, a number of public and private sector initiatives have already been set-up to develop bio-fuels in the Philippines, including a Php 12 billion private sector investment expected to produce about 240 million liters of bio-fuel annually, and various public private partnership (PPP) projects between the Aquino government and the private sector.

Says Gregory Kittelson of Philippines consulting firm , Kittelson & Carpo Consulting, “We’re seeing a lot of growth potential in the Philippine agriculture industry, particularly in the poultry and livestock, fisheries, and bio-fuel development sub-sectors. A number of foreign and local companies are already tapping into these industries, and opening up employment opportunities in Philippine agribusiness. If this persists, we could easily be looking at sustainable growth in the Philippine economy.”

Sources:

http://www.sourcephilfood.com/new.php?n=1612 (Agri Seen to Grow By 3.5% in the Next Year, Go Marianne, Philippine Star)

http://globalnation.inquirer.net/columns/columns/view/20090902-223209/Getting-rich-through-agribusiness (Getting Rich Through Agribusiness, Dr. Bernardo Villegas, Inquirer)

http://www.manilatimes.net/index.php/business-columns/34634-imf-lifts-manilas-2011-gdp-forecast (IMF lifts Manila’s 2011 GDP Forecast, Lailany Gomez, Manila Times) AmCham Business Journal July 2010 (Prospects of Agribusiness in the Philippines, Lope K. Santos)

http://newsinfo.inquirer.net/inquirerheadlines/nation/view/20100630-278352/Nursing-out-agribusiness-in-as-top-job-generator (Nursing out, Agribusiness in as top job generator, Kristine Alave, Philippine Daily Inquirer)

http://breakingnewsph.com/agrinurture-p1-7b-agribusiness-projects-china-county/ (Inquirer Business)

http://breakingnewsph.com/agrinurture-supply-market-veggies/ (GMA News TV)

http://www.mb.com.ph/articles/250808/giant-thai-agribusiness-firm-puts-p1billion hog-production-facility-tarlac (Bernie Cahiles-Magkilat, Manila Bulletin)

http://www.bas.gov.ph/?ids=agriperformance (Performance of Philippine Agriculture 2010, Bureau of Agricultural Statistics)

The Act recognizes tourism as an “indispensable element of the national economy and an industry of national interest and importance, which must be harnessed as an engine of socio-economic growth and cultural affirmation to generate investment, foreign exchange and employment, and to continue to mold an enhanced sense of national pride for all Filipinos.” Under this law this translate to increased funding and resources for the Philippine Department of Tourism (DOT) and its affiliate agencies to effectively implement a “national policy for tourism” that would serve as “an engine of investment, employment, growth, and national development” in the Philippines.

The Act also provides for the establishment of “Tourism Enterprise Zones” in strategic areas in the country, geared toward luring foreign investors and tourists to visit these sites. Some recently established tourism enterprise zones include places like Cebu, Davao, Iloilo, Bohol, Laguna, Cavite, Boracay, and Palawan, chosen for their cultural and historical significance. Tourism Enterprise Zones are designated by the Tourism Infrastructure and Enterprise Zone Authority (TIEZA), the government agency responsible for regulating and supervising these sites.

This has not only improved the Philippine Tourism industry as a whole, but also created more job opportunities for residents working in these areas. Says Gregory Kittelson of Manila consulting firm Kittelson & Carpo Consulting, “The Philippines is a beautiful country. It boasts some of the most scenic beaches, and spectacular scuba diving in the world. Beach resorts are also more affordable here, and readily available to tourists looking for a real bargain without sacrificing qualiity service and overall beauty. With the implementation of tourism laws, and the establishment of Tourism Enterprise Zones, the future of the Philippine tourism industry has never looked brighter.”

According to Manila lawyer Amanda Carpo of business consulting firm Kittelson & Carpo Consulting,"There are a lot of things to consider before setting up a foreign-owned business in the Philippines. Domestic subsidiaries of foreign corporations are subject to our laws. Corporate law in the Philippines has some similarities to U.S. laws, making it easier for U.S. based companies to navigate the country's legal system. Government issued tax incentives and exemptions are also available to foreign companies that register with either PEZA or BOI , and/or provide employment opportunities for the local workforce, increase export values, as well as develop the country's natural resources."

Republic Act 7042, also known as the Foreign Investments Act (FIA) of 1991, is the law that directs all foreign investments in the Philippines. According to this law, foreign investors are permitted to hold as much as 100% in equity investments in almost any kind of enterprise, as long as it does not fall under the Foreign Investments Negative List (FINL) of the government. The Foreign Investments Negative List differentiates the investments that are open to foreign nationals, and those that are reserved for Filipino entrepreneurs. Under the same act, foreign investors must advance a minimum amount of USD  200,000 into any local enterprise before being allowed to do business in the Philippines . However, this only applies to foreign-owned companies engaging in domestic market enterprise, meaning that more than 60% of their clients are based in the Philippines. Foreign companies registered with the Securities and Exchange Commission (SEC) are exempted from paying the USD 200,000 in minimum capital requirement.

The procedure is completely different for foreign branch offices in the Philippines. Outsourcing companies setting up branch offices in the Philippines need not remit the USD 30,000 in capital requirement. These types of companies are also required to register with the SEC and the Bureau of Internal Revenue (BIR). In accordance with Title II Section 13 of the Philippine Corporation Code, foreign branch offices in the Philippines are required to invest an initial capital of Php 5,000. Government-issued tax incentives are also available to foreign companies registered with the Philippine Economic Zone Authority (PEZA), the Board of Investments (BOI) or the Cagayan Economic Zone Authority (CEZA ).