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December 5, 2017

Spanish companies keen on PH infra projects

NEWS
Spanish companies turned out in record numbers on Tuesday, lured by the Philippines’ massive infrastructure needs. More than 30 Spanish firms, many of which are global leaders in transportation, water and energy infrastructure, attended the two-day Philippines-Spain Multilateral Partnership meetings that started yesterday. “The Philippines is an impressively promising country,” Franciso Javier Garzón, CEO of ICEX-Spain Trade and Investment, said. The state-run organization mainly supports the international investment activities of Spanish investors, while also looking to attract investments to Spain. A key theme on Tuesday was bringing together Spanish and Filipino companies. Garzón noted that Spain-based firms were “eager to join forces with local counterparts.” Among these was train maker CAF, which has a partnership with Japan’s Mitsubishi Corp., the company that was recently awarded the P19.6-billion contract to supply new train cars for the Light Rail Transit Line 1 in Metro Manila. “Upgrading the country’s infrastructure will be key to reducing poverty,” Garzón said.
(Source: Philippine Daily Inquirer, 22 November 2017)
 
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RESEARCH VIEW
The government’s massive infrastructure program is attracting several investors. Aside from Spanish firms, a number of countries such as China, Japan, and Korea have expressed interest to build infrastructure projects in the country thru official development assistance (ODA). We believe that the completion of projects such as Metro Manila subway, Cebu light rail transit (LRT), Mindanao Rail Network, and Northern-Southern Luzon Passenger Rail projects should boost the country’s property sector as these projects are expected to unlock land values in areas outside of Metro Manila. Several airport projects have also been proposed to be funded thru a mix of ODA and government financing. Once completed, these airports should attract more tourists and generate leisure-related jobs and investment opportunities such as hotels, retail shops, and meetings, incentives, conventions, and events (MICE) facilities


D&L investing in new factories

NEWS
Five years after its last expansion program, chemical and food ingredient manufacturer D&L Group plans to build new manufacturing facilities in Batangas to set the stage for future growth. In a disclosure to the Philippine Stock Exchange on Thursday, D&L Industries said two companies under the group – D&L Premium Foods Corp. and Natura Aeropack Corp. – submitted applications with the Philippine Economic Zone Authority (PEZA) for the registration of new manufacturing facilities in a PEZA zone in Batangas. The proposed facilities will rise on a 26-hectare property in First Industrial Township, a special economic zone in Batangas. In line with D&L’s asset-light business model, the lot was acquired by the property company of the Lao family and it will be leased to the group. The capacity-building project is expected to generate about 700 new jobs, with construction and commissioning to be completed in 2021. “This initiative is part of the group’s strategic direction to grow the export business and focus on higher value and higher margin products. Once registered with PEZA, D&L Premium Foods and Natura Aeropack will be required to meet the 50 percent export sales requirement for Filipino enterprises,” D&L said.
(Source: Philippine Daily Inquirer, 23 November 2017)
 
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RESEARCH VIEW

The expansion of chemical and food ingredient manufacturer D&L Group should raise industrial space absorption in Batangas and further strengthen the province’s viability as a major industrial hub. Aside from Cavite, Laguna, and Batangas, other areas that we see benefitting from sustained manufacturing growth are Pampanga, Tarlac, Pangasinan, and Cebu. Colliers believes that aside from the Philippines’ growing attractiveness as a manufacturing hub in Asia and the continued expansion of existing industrial locators and Filipino conglomerates, industrial space absorption in the country should be sustained by the Trade department’s thrust to attract investors that will manufacture products domestically that can be used as substitutes for imports and continued implementation of the Comprehensive Automotive Resurgence Strategy(CARS) program which provides fiscal incentives to firms that assemble vehicles in the country.


DPWH weighs CALAX Batangas extension

NEWS
The Department of Public Works and Highways (DPWH) is now evaluating Metro Pacific Investments Corporation’s P24-billion Cavite Batangas Tagaytay Expressway (CTBEX) unsolicited proposal, Secretary Mark A. Villar this week (November 23, 2017) announced. DPWH is vetting whether the 46.2- kilometer tollway project, an extension of CALAX (Cavite-Laguna Expressway), should be given original proponent status, he added. The project proponents, MPCALA Holdings, Inc. and Metro Pacific Tollways South Corporation, submitted the unsolicited proposal this July 7. The tollway, which will extend Metro Pacific’s reach in Southern Metro Manila, consists of a two-by-two lane carriageway traversing mostly the rural areas of Silang, Tagaytay, Amadeo, Mendez, Alfonso and Magallanes, all in Cavite province, and Nasugbu in Batangas. It will link the 44.6-km CALAX at Silang East Interchange to Tagaytay City and will terminate at Nasugbu. The CTBEX will likewise connect to Metro Pacific’s existing Cavite Expressway (Cavitex), a 14-km tollway linking Metro Manila to Kawit, Cavite. Earlier, MPCALA Holdings, Inc. President and CEO Luigi L. Bautista disclosed, “If we get the original proponent status, that’s when we will do the detailed engineering design.” Project construction is slated to start by the first quarter of 2019. The proposal will not have any conflict with San Miguel Corp.’s P27-billion proposal to build an alternative toll road that will link Tagaytay to Metro Manila via Cavite and Batangas. Already, the Metro Pacific group has broken ground for the Laguna segment of the P35.43-billion CALAX, a Public Private Partnership (PPP) project that Metro Pacific clinched in 2015, The CALAX starts in Kawit and will end in the South Luzon Expressway-Mamplasan interchange in Biñan, Laguna.
(Source: Manila Bulletin, 25 November 2017)
 
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RESEARCH VIEW

The expansion of Cavite-Laguna Expressway should benefit the Southern Luzon provinces  such as Cavite, Laguna, and Batangas. The road project should benefit key municipalities in Cavite such as Silang, Tagaytay, Amadeo, Mendez, Alfonso and Magallanes, and Nasugbu in Batangas.Once completed, the expanded expressway should raise land values in Cavite, Laguna, and Batangas and open more retail and residential opportunities in Southern Luzon. The project, once completed, should further buoy the competitiveness of the Cavite-Laguna-Batangas as the Philippines’ main industrial corridor.Colliers expects industrial land and standard factory building (SFB) leasehold rates growing by 4-5% over the next 12 months. We see the increase in rates slowing down to 2-3% between 2019-2020 due to the development of more industrial space in Northern/Central Luzon area and the rising viability of these parks for manufacturing operations.


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Colliers International | Manila 11F Frabelle Business Center, 111 Rada Street Legaspi Village, Makati City 1229 Philippines | Tel: +632 888 9988