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October 27, 2017

Duterte pal buys $1-B Clark logistics project

NEWS
Davao-based businessman Dennis Uy has finalized a deal to acquire a company developing a $1-billion, 177-hectare logistics hub called Global Gateway Logistics City in Clark City. The deal has been approved by the Philippine Competition Commission (PCC), the country’s antitrust body mandated under the Philippine Competition Act to review mergers and acquisitions worth at least P1 billion to ensure that these deals would not prejudice the interest of consumers. The PCC announced its approval of the acquisition on Thursday night. Clark Global City Corp., an affiliate of Uy’s holding firm Udenna Corp., acquired the entire capital stock of GGDC Holdings, the majority shareholder of Global Gateway Development Corp. based in Cayman Islands and owner of the leasehold rights to the land where Global Gateway Logistics City is located. Udenna bought the project from Kuwaiti fund KGL Investment Co. (KGLI), which started the project. The project is estimated to be worth $1 billion, with further upswing seen in case land prices increase.
(Source: Philippine Daily Inquirer, 21 October 2017)
 
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RESEARCH VIEW
The government has lined up several infrastructure projects in Clark and nearby areas and these should promote Clark’s viability as a major logistics hub. Among the key projects in the pipeline is the expansion of the Clark International Airport which covers the construction of a new terminal building projected to be completed by 2019. The expanded Clark Airport is being positioned as an alternative to the congested Ninoy Aquino International Airport (NAIA). The project, once completed, will double the airport’s capacity to 8.4 million passengers per year. Other projects include the Manila to Clark railway which will be completed by 2022 and has the capacity to handle 56,000 passengers during the first year of operations. Some private firms are also pushing for the development of  a container rail line from Clark to Subic.


BPO investment pledges picking up after Senate retains tax perks

NEWS
Investment pledges in the country’s business process outsourcing sector are picking up after the Senate retained the current tax incentives for the industry, Sen. Sonny Angara said. Angara, chairman of the Senate Committee on Ways and Means, said the panel did not touch the information technology-business process management (IT-BPM) industry’s tax incentives in crafting its version of the Tax Reform for Acceleration and Inclusion (TRAIN) “to enable the country to continue attracting more BPO investments that would spur economic growth and create more jobs for Filipinos.” “Our policy should always be geared towards making doing business in the Philippines easier and easing unemployment in the country,” the senator said. He said IT-BPM industry has been one of the biggest job generators of country in recent years and he vowed to find ways to reduce unemployment in the country. The IT-Business Process Association of the Philippines (IBPAP) earlier information technology-business process management investment pledges in the country are now showing “signs of recovery” because of the Senate’s move. The IBPAP said new investment commitments slowed down because of various uncertainties. Some investors are delaying decisions to invest in the Philippines or deciding to invest elsewhere amidst earlier plans to alter the current tax regime for investors. The group thanked the Senate for its continuing support of the IT-BPM industry “especially in view of the headwinds and challenges that the industry is currently dealing with,” IBPAP president Rey Untal earlier said.
(Source: The Philippine Star, 17 October 2017)
 
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RESEARCH VIEW

Office space absorption from outsourcing firms slowed down in the first six months of the year due to perceived geopolitical concerns and delays in the approval of applications for incentives. Despite this, Colliers International Philippines is optimistic that office space take up from Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO) firms will rebound as a number of current players have already closed major accounts while firms get a clearer view of the government’s fiscal policies. Initially there were concerns that the government’s tax reform program will adversely affect the operations of BPO firms which fuel office space absorption in the country. But it is reassuring that the Finance department and some lawmakers already announced that the VAT perks for BPO firms will be retained. Thus, we expect outsourcing firms to continuously open shops and occupy additional office space. Tax perks are among the factors that make the Philippines a competitive BPO hub.


Developer optimistic on NegOcc’s bullish economy

NEWS
Suntrust Properties Inc. (SPI), a wholly-owned subsidiary of Megaworld Corp., remained optimistic on the growth of its investments amid the bullish economy of Negros Occidental, especially Metro Bacolod. SPI president Harrison Paltongan, who led the blessing of model houses at the 24.52-hectare mid-cost residential project called The Fountain Grove at Matab-ang Village here Saturday, October 21, said they have seen the potential of the province before they started the development. He said that 23 percent, or 200 of the 800 house units were already sold after the project construction was launched in October last year. “We are optimistic to sell more than double in 2018 especially with almost full land development works now,” Paltongan said. “We are looking at selling out 100 percent in less than four years since the time it was unveiled.” The Fountain Grove is part of the 53-hectare Northhill Gateway, a township development that will soon rise along the Bacolod-Silay Airport Access Road, bordering the cities of Talisay and Bacolod. The firm earlier said that its initial investment of P2 billion covers the land development and construction of other amenities. With the recognition given to Bacolod as one of the most business-friendly cities in the country and with Negros Occidental as the third richest province this year, Paltongan said their confidence to invest in the province has been boosted. He added that they are happy to see that even the local government is doing its task especially in terms of infrastructure works, including airport road expansion and construction of economic highways, among others. “We are happy to bring our private development here. In fact, we are looking at more expansion in the island,” Paltongan said, adding that “people in Metro Bacolod, including cities of Talisay and Silay, should reinvest their resources in the province instead of buying houses in Metro Manila.”
(Source: SunStar Bacolod, 23 October 2017)
 
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RESEARCH VIEW

Demand for horizontal housing units in Bacolod is still primarily driven by Negrenses. We see significant demand from newly launched projects, particularly those at the PHP3.2 million (USD64,000) and below threshold. Wealthy families also fuel the demand as they purchase lots for their second homes or as inheritance for their children. The rise in residential take-up  is an indication of a potential for growth in the Bacolod residential market. While Colliers recognizes that there is still much room for growth given the relatively small number of launches per quarter, it is noteworthy that launches in the last seven months have been significantly sold. At this point, Bacolod is still in the early stages of development but it has the elements of a budding provincial hub for residential projects. Take up is partly attributed to low lending rates, remittances from OFWs, and a healthy regional economy driven by local and foreign businesses.


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