Monthly Archives: June 2012

Pre-Leasing and Energy efficiency is already the trend in the Philippine office space

Its nice to know the commercial property is booming so much pre-leasing is now common. At the same time, energy efficient buildings are becoming the norm for new office space.

Office Space Demand At All-Time High, Pre-Leasing Is Back – CBRE

June 20, 2012, 4:18pm

MANILA, Philippines — Demand for office spaces in major business districts in the country has never been this robust with pre-leasing arrangements now accounting for an all-time high average of 44 percent of total office space supply, a property management expert said.

Rick Santos, chairman and CEO of the local unit of global leading property management company CBRE, revealed in a press conference for its regular update in the property space market that pre-leasing, which now accounts for an average of 44 percent, accounted for only 10 to 15 percent of total annual supply in 2007, which is the previous peak in the property market or during the pre-financial crisis.

“The reality now is this is the all-time high,” Santos said noting that during the pre-crisis period the available annual office space supply then was only between 300,000 to 400,000 square meters as against the current 500,000 square meters of office supply.

“The Philippines is no longer the sick man of Asia, it is now the sweet spot for investors,” he said stressing the country is experiencing the “best real estate market in the Philippines in the last 20 years.”

Occupancy rates during the first quarter hovered at 96 percent, Santos said.

Propelling the growth is the country’s robust GDP at 6.4 percent in the first quarter, the robust BPO sector, political stability, the democratization of the housing sector, among others.

Pre-leasing or pre-commitment means the tenant and landlord entered into an agreement that the tenant will occupy a particular space

in the soon to be completed building. This could be covered by a letter of intent of the prospective client, but no advance rental is paid.

Pre-leasing activity happens within six months prior to building completion.

“Pre-leasing is back. The office sector goes from strength to strength with a surge of pre-leasing commitments in the central business districts,” Santos added.

John A. Corpus, CBRE director for global corporate services, explained that the last time pre-leasing of office spaces occurred in the country was in 2007 when the economy posted robust growth. Office spaces were committed in 2006 to 2007 when build to suit offices for BPOs were constructed but this was cut short by the 2008 global financial crisis leading to high office space vacancy rates.

Corpus said the office space supply in the major business district is estimated at 520,000 square meters for this year alone and about 580,000 units in 2013 and more to come in 2014 or an average of 500,000 square meter of office space supply annually.

For the Makati Central Business District alone, the Glorietta 2, which would be fully completed by the second quarter this year has been 100 percent pre-leased as well as Greenbelt 2, which is expected to be fully completed by the first quarter of 2013, he said.

The Zuellig Building, the first certified green building in the country to be fully operational by third quarter of 2013, is already 45 percent committed.

Office buildings with completion dates this year up to 2013 in other business districts such as Fort Bonifacio, the fastest growing business district in Metro Manila, the Ortigas-Mandaluyong business district, the Bay Area, and the Quezon City area have higher pre-committed office spaces.

Corpus also explained that normally companies resort to pre-leasing arrangement because of cost consideration, need to secure space, flight to quality, expansion and consolidation of offices.

Most of the top-end office spaces have been reserved by foreign financial institutions, multinational companies and, BPO firms that are expanding operations in the country.

In terms of office space rental, CBRE reported that Makati still remains the lowest as it is 10 times lower than that of Hong Kong lease rates.

“We are still the cheapest and I don’t see why investors will not come here, the wave the best quality, technology, good buildings and political stability,” Corpus said.

Rental in Makati has gone up to P830-P850 per square meter rate from P810 in the third quarter of 2011, which is still tolerable, he said.

“Landlords are trying to push rental rates higher at P1,000 per square meter but if the rates will not hit this level it is because supply is also catching up with demand,” Corpus said.

Fort Bonifacio office space rental is at P750 per square meter while Alabang is at P540 and Quezon City and Ortigas at P570 per square meter.

In terms of the residential sector, Victor Asuncion, CBRE Executive Director for global research and consultancy, reported of 143,123 upcoming units as of June 2012 and two-thirds of this supply come from Makati, Quezon City and Manila areas.

This sector is also moving towards the broad-based market of P40,000 to P80,000 per square meter price, Asuncion said.

The P80,000 to P100,000 per square meter housing unit are also getting a lot of attention and accounts for as much as 42 percent of total industry supply.

Other residential developments in the major cities outside Metro Manila like Cebu, Davao and Iloilo are also getting their fair share of the market and strong take up rates.

“There is no supply glut in the residential development sector,” he said.

Santos further noted that this robust growth in the housing sector is buoyed by the democratized industry where bank lending rates are still on the downward trajectory.

“The liquidity in the market enables developers to provide more affordable payment terms to buyers. Low cost borrowing are likewise spurring development expansions in the residential/housing sector,” Santos said.

According to Santos, the “Philippine property market is turning green into gold” noting that green buildings, where there are at least five LEED Certified buildings are future proof of investment.

PHP 60 B (AUD$1.2 B) rail project is on

I hope to see some Australian companies involved in this infrastructure which is one of the biggest so far in the Philippines. Leighton which is an Australian company was one of those firms which purchased the pre-qualification documents.

EXCLUSIVE: P60-billion light rail project lures 10 firms

Sunday, 24 June 2012 Lenie Lectura / Reporter

THE groups of Manuel V. Pangilinan and Ramon S. Ang are among the more than 10 firms that have formally signified interest to bid for the P60-billion operation and extension of LRT 1 (Light Rail Transit 1) to Cavite province, south of Manila.

A well-placed source told the BusinessMirror over the weekend that among those that purchased pre-qualification documents were “San Miguel Infra, Mitsubishi Corp., D.M. Consunji, Hanjin, Sumitomo Corp., Leighton, Marubeni, ING Bank, BPI Capital, FF Cruz, Macquarie Group and the group Manuel V. Pangilinan and Ayala Corp.” Ang belongs to the San Miguel group.

Pangilinan-led Metro Pacific Investments Corp. and Ayala have formed a consortium that will participate in the auction of the railway project.

“They already bought pre-qualification documents. August is the deadline for the submission of the requirements stated in the pre-qualification documents,” said the source, who added that many more are expected to purchase the documents.

The Department of Transportation and Communications (DOTC) issued on June 4 an invitation to pre-qualify and bid for the LRT 1 Cavite extension project.

The existing 20.7-kilometer (km) LRT Line 1 from Roosevelt (Quezon City) to Baclaran (Pasay City) will be extended by 15 kilometers to Cavite by adding 10 stations passing through Parañaque City, Las Piñas City and Bacoor town in Cavite.

Transportation Secretary Manuel Roxas II had said interested firms must be able to operate and maintain the existing LRT 1 as well. Moreover, bidders must replace the train fleet and undertake required rehabilitation works on the railway infrastructure and systems over the life of the concession.

Those who purchased the pre-qualification documents for P50,000 each have until August 22 to submit their initial requirements, followed by a pre-bid conference sometime in October this year.

The winning bidder will be announced next year while the contract is slated for award in April 2013.

The project will have five components:

– Operation and maintenance of the existing system, which is 20.7 km long, has a loop time of 106 minutes with 20 stations traversing Quezon City, Caloocan City, Manila, Makati City and Pasay City. The company would take on service and repairs of depots, electrical and mechanical systems, rolling stock, stations, tracks and other assets.

– Design, construction, testing and completion of the 10.5-km elevated and 1.2-km “at-grade” extension to Cavite and eight stations, plus two future stations.

– Integration of the existing system with the new extension system, including train control and signaling, communications and the power-supply network along the more than 30-km total line.

– Operation and maintenance of the integrated system, including replacing trains and rehabilitating railway infrastructure over the life of the project.

– Enhancement of the integrated system, including fleet upgrades, future required depot and fleet expansions and all other necessary investments to sustain service and performance standards.

It is expected, the source added, that some of the 15 firms may form their respective consortium, and that the project-which is included in the public-private-partnership (PPP) list of President Aquino—is very attractive even to some investment banks.

“They [banks] have to buy the pre-qualification documents so as to avoid being eased out. To join the bidding, the firm or at least one of the members of the group or consortium that will participate in the auction should have bought the pre-qualification documents. So for the banks to have an advantage, they should buy their own [documents] rather than be at the mercy of the ones who [had] bought [the documents],” the source said.

Renewable energy is the priority

Its good to know there are already 304 contracts issued by the Philippine Department of Energy for energy producers to generate over 7,000 MW of power. This is compared to contract for coal production of 1,935 MW. Let’s hope these contracts are actually converted to reality to provide the needed cleaner and hopefully stable power required by the country. Maybe cheaper too.


RE, not coal, is energy department’s focus—Almendras


Monday, June 25th, 2012

The Department of Energy (DoE) on Monday announced that the capacity that could be generated from renewable energy (RE) sources has been growing, refuting critics’ claims that the agency has been “prioritizing” coal-fired power plants.

The DoE said that, to date, it has awarded 304 RE contracts that would generate 7,843.65 megawatts (MW) in capacity.

“This is significantly a lot more than the coal-fired power plants’ generating capacity totaling 1,935 MW as of end-June 2012 endorsed by the DOE,” the department said.

In addition, the share of green energy in power generation, in terms of installed capacity, stood at 58.2 percent in 2011, from the 55.1 percent of 2010, the DoE said.

Of the country’s total energy mix, the share of renewable energy sources likewise increased to 28.4 percent in 2011 from the 26.3 percent of the previous year.

These numbers show that from 2010 to 2011, the Philippines has been increasing its green generation capacities, the DoE said.

“There are very few countries in the world that can stand up and say that 58.2 percent of their power is green. As a matter of fact, UNIDO [United Nations Industrial Development Organization] has set a target of 30 percent renewable by 2030. Clearly, the Philippines is way ahead of this target,” Energy Secretary Jose Rene D. Almendras said.

Due to the renewed confidence in the Aquino administration, as clearly evidenced by the economic numbers, electricity consumption has grown faster now than the last 10 years, Almendras said.

Power distributor Meralco, for example, announced that their year-on-year growth is now at 10 percent, and leading the increase is the industrial sector, which rose by 13.4 percent.

This double-digit growth in electricity consumption has not been seen in years, Almendras said, explaining that the average growth in the past 10 years was 4.3 percent.

“All of these indicate that we must increase baseload generation to meet the increased consumption of electricity so as not to stifle economic growth,” the energy chief said.

“Then there is the other challenge of keeping electricity rates low; therefore we must increase generation capacity using the lowest cost technologies to meet the short- to medium-term needs.”

Almendras believes that sustainable options will become “more economically viable” due to advancements in technology.

“It is precisely why the DOE sees more RE and green options taking the lead by 2017 and beyond,” he said. “We are not restraining the growth of green and renewable generation. We just need to consider when these capacities will be available. While waiting for them to be available, we must explore other technologies.”

The US$1 Billion question

When news came to my attention that the BSP (the equivalent of the Reserve Bank in the Philippines) lent the IMF a Billion dollars in support of its efforts to stabilise the Euro, I felt something was odd with the information. How could the country which continues to have a large debt (US$61 Billion) afford to lend such huge amount. When access to credit particularly to small business and a lot more of other sectors in the economy in dire need for credit wouldn’t the money better used here? Or even offering alternative forms of investments for the over 10 million Filipinos working overseas why choose to do this. While the intentions are good in doing this, it appears the terms of conditions of this arrangement and more particular how the action taken is communicated to the public.

From BusinessWorld Philippines

June 28, 2012

Claiming false credit

You know something is terribly wrong with the Philippine economy when Malacañang and the Bangko Sentral ng Pilipinas (BSP) boast of our being “international creditors” for the first time, and attribute this to “sound fundamentals and management” of the economy.

They try to conjure the illusion that the country is now awash with so much cash that it can afford to contribute a billion dollars to an international fund managed by the International Monetary Fund (IMF) to succor European countries in financial distress.

And, as if that were not enough good news, they add that Filipinos need not worry about losing so much money; in fact we stand to gain more from interest, since the contribution is in fact a loan.

What the government is not telling us is that the Philippines has been classified as an “IMF creditor” by virtue of a narrow technical definition that an IMF member has a “creditor position” if its holdings in the Fund can be used to provide financial assistance to other members.

But this is vastly different from jumping to the conclusion that the Philippines has actually become a “creditor nation”.

Determining whether one is a “net creditor” entails comparing the country’s lending with its borrowing. Foreign exchange reserves, no matter how high, are not the measure for this. If positive reserves were the criterion, then the Philippines could claim to have achieved the status of a “creditor nation” since the time of the Marcos martial law years when our external debt was growing by leaps and bounds.

Nothing has changed even with the label “IMF creditor” attached to the Philippines. We remain a heavily indebted nation (US$61.7 billion as of end 2011); highly dependent on foreign sources of financing primarily to shore up the budget deficit averaging some P300 billion a year. Debt service payments grew by US$ 100 million to US$7.3 billion last year.

It must be clarified at this point that the Gross International Reserves (GIR) held by the BSP is in the form of IMF deposits, other foreign currency deposits elsewhere, gold, Special Drawing Rights (SDR), US Treasury bills and the like. It is from the deposit of the Philippines/BSP with the IMF (also called “IMF reserve position”) that the $1 billion has been made available for loan to EU countries in deep financial crisis.

While it is true that these transactions earn interest and the funds can still be technically counted as part of the Philippines’ international reserves, a point can be raised about how much the country is losing in terms of lower interest on the IMF loan as compared to other placements with potentially higher yields.

Progressive party list representatives, trade union and peasant leaders — all opponents of government’s prioritization of debt servicing over social services — as well as two senators and several opinion writers have asked how the BSP (and the Aquino government for that matter) could have the effrontery to “lend” money to the international lender-of-last-resort that is the IMF when the country remains a perennial heavy borrower itself.

These critics ask pointedly whether the money — P43 billion — could be better spent on health, housing, and education for impoverished and barely surviving Filipino families; for land reform and support for an agricultural sector in continuing decline; for job generation as well as infusing life into an anemic economy battered by heightened domestic and global economic crises. In other words, for the government to come to the aid of the majority of the Philippine population rather than contribute to an IMF bail-out fund for heavily indebted countries in the Euro zone.

Again, what the government is not telling us is that the GIR from which the loan came, and which the BSP boasts to have reached a record high of $76.534B, consists of foreign assets that cannot be used in the same way as the National Government fund. That is, the GIR may not be allocated for regular government programs and projects in order for it to serve three functions: for intervention in the foreign exchange market, for creditworthiness, and for emergencies.

A country’s GIR indicates its ability to repay foreign debt and to defend its currency from speculative attack. It is used as a yardstick to set the country’s credit ratings.

So why is the Aquino government foisting the false impression on the public that the BSP has so much money in its vaults that could be made available to the government to uplift the people’s dire socio-economic conditions?

Unfortunately, we can only come up with the conclusion that government needs to justify the BSP’s accession that the country contribute to the IMF bail-out fund by (1) claiming that the economy is so robust and well-managed that the Philippines can now boast of being in a position to lend to other countries and (2) arguing that the loan is a worthwhile humanitarian investment and demonstrates the Philippines’ sense of responsibility to the international community.

Moreover, the announcement of BSP Governor Tetangco raises even more questions:

1. Does the BSP have a free rein on handling/managing the entire GIR? What check-and-balance is in place to ascertain that the GIR is being managed properly? Who decides, for example, and how, on the investments and loans being entered into by the BSP from the GIR? Does this not, after all, belong to the Filipino people as much as the national funds which only Congress can decide to apportion?

2. Was the loan voluntary or mandatory? While the BSP statement implies that the loan was voluntary and undertaken as a contribution to the IMF’s efforts “to address the current financial crisis” and “help other countries saddled with financial problems”, it is not farfetched that the loan is in fact obligatory or, at the least, is being given under pressure, considering that the Philippine economy continues to be quite dependent on the good graces of international financial institutions such as the IMF and World Bank.

3. Finally, will the IMF fund to which the Filipino people have been made to contribute $1 billion, really be used for the benefit of the people of the distressed countries in the Euro zone? Or will it again, like the trillions of stimulus funds, be used to bail out big banks and monopoly conglomerates that caused the financial crisis in the first place, or to pressure governments in distressed countries to follow IMF-dictated policies that will only benefit such big banks and conglomerates? Have not the IMF and World Bank been the main instruments, in the first place, in carrying out the neoliberal policies that have brought about the global financial and economic crisis?

All said, a closer and more critical look must be taken into the management not only of the country’s financial resources, but also of the so-called economic “fundamentals” — the neoliberal framework on which the policies and decisions by the BSP and economic managers are anchored.

For the grandiose claims that the country is finally free from foreign impositions and restrictions after having exited from the IMF Post-Program Monitoring Arrangement (when the BSP prepaid all Philippine outstanding debts from the IMF in 2006) are now matched by stupendous claims that we are, at long last, a “creditor nation.”

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Home ownership is the new democracy in the Philippines

Despite what is said about the continued poverty still existing in the country, its nice to know there is a new democracy happening with home ownership becoming a trend among locals. Let’s hope the growth in democratic rights in this form continues.


Housing sector undergoing ‘major transformation’

Posted By Michelle Del Gallego-Ngo On June 20, 2012

The country’s residential sector has shown continuous growth based on strong demand from a broader market 2012 and onward, said real estate services and advisory firm CBRE Philippines.

CBRE chairman and CEO Rick Santos said there is a major transformation in the housing sector. “The Philippines is experiencing democratization in the housing sector—from a nation of renters to owners—based on low interest rates and financing schemes,” said Santos during press briefing held Wednesday in Makati City.

Santos said bank-lending rates are still on the downward trend that allowed sustaining the liquidity in the financial system. Furthermore, he said the increasing affordability of funds for housing acquisitions fuels the strong demand in the residential sector “The liquidity in the market enables developers to provide more affordable payment terms to buyers. The low cost of borrowing is likewise spurring development expansions in the residential/housing industry,” he said.

“The single-digit mortgage rate has democratized the housing ownership in the Philippines allowing Filipinos to buy rather than just being renters.  In most cases, monthly rents for a typical household dwelling in Metro Manila are now at par with house and lot or residential condominium products now available to a broader market base,” he added.

He said the modern Filipino household is becoming condominium dwellers to keep pace with the urban living within a live, play work environment. As a result, demand for affordable condominium units continues to grow year on year.

In the same briefing, the property management firm also stressed development of green buildings will support the robust growth of the country’s property market.

Santos stressed the benefits of going green are evident not only for landlords, but also for tenants/occupiers.

“Fortune 500 companies, multinational corporations, and even domestic firms now consider green initiatives as prerequisites in their day-to-day maintenance and operations,” says Santos. “Through our global networks and resources, we have been strengthening the drive towards sustainable development which, as pointed out in several studies, could also benefit not only developers and the environment but also end-users—tenants, employees and residents—in the long run,: said Santos.

To date, there are five buildings in the Philippines which have received certification from Leadership in Energy and Environmental Design (LEED). These are the Asian Development Bank, Nuvali One Evotech, Shell Shared Services Office, and Texas Instruments in both Baguio and Clark. Additionally, 58 projects are currently registered for LEED certification. These include the Zuellig Building in Makati; BTTC Centre in Greenhills, Megaworld 8 Campus Building in Bonifacio Global City and Wells Fargo Headquarters in Bonifacio Global City. CBRE Philippines is the leasing and property management agent for the Zuellig Building and BTTC Centre and the project manager for the interior build-out of the Wells Fargo Headquarters.

Santos added that the sustainability agenda will continue to grow in importance in the real estate sector. “As the outsourcing and offshoring sector gains strength in the country, we see more occupiers and developers prioritizing flight to quality, with green buildings becoming more the norm than the exception.”

LEED, developed by the US Green Building Council, was designed to benchmark building performance and environmental design and covers several categories: new construction, core and shell, existing buildings, commercial interiors, homes, and neighborhood developments. A local rating system also used in the country is BERDE, which is under the Philippine Green Building Council.

CBRE Philippines director global services Joanie Mitchell said in the Asia-Pacific region, the scale, pace and general trend of recent construction has been geared toward efficient commercial real estate that is in compliance with green building codes.

While the development of green buildings is on its pilot stage in the Philippines, Mitchell said proven benefits may be drawn from a study conducted by the CBRE Global Network. “For instance, while development of green spaces may entail additional cost at the onset, this investment in green building is recoverable and is expected in the long run through decreased operating costs, increased return on investment through higher tenant/customer retention and renewal, rental premium, and increased building/asset value,” she said.

Developers are thus becoming much keener in meeting these demands and are seen to be more willing to incorporate Lgreeng features into their buildings, making them cheaper to occupy, according to Mitchell.

Green buildings are therefore increasingly seen as future-proofed investments.  While there is currently no single agreed definition or measure of what constitutes a green building, the tools that exist for assessing the environmental credentials of a building are becoming more widely used and accepted .

In a 2011 update by CBRE on Current Trends in Green Real Estate, it was noted that from an occupier’s perspective today, occupying green buildings is an important step towards achieving corporate sustainability objectives. An energy-efficient building is still believed to offer real economic attractions to a tenant.  Quantifiable benefits include greater productivity of employees, less sick days, higher employee satisfaction rate in work-environment conditions. Additionally, there is an improved level of employee engagement in corporate activities and an enhanced corporate public image.

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Renewable energy is the way to go

With the need to control carbon emissions, preserve the environment and find new economic opportunities in our focus to promote cleaner technologies to address both situations, renewable energy is the way to go. For the Philippines which suffers from high power costs or no or limited power (in the rural communities), this may just the solution to our problems.


Govts turn to renewables for rural electricity

Posted By Jenny Marusiak On June 12, 2012 @ 2:49 pm In Energy,Features,Policy & Finance | No Comments

Government targets to provide electricity in rural areas are drawing new renewable energy investments, particularly in developing countries, said a report launched on Monday.

The Renewable 2012 Global Status Report [1] from global policy network REN21 said that governments are finding that off-grid or micro-grid renewable energy projects are often cheaper than extending their conventional power grids to rural areas. This affordability, along with greater availability of technology, is prompting most developing countries to include such projects in their electricity distribution plans, noted the report.

Off-grid energy projects and micro-grids, which are small-scale, self-contained local grids, provide electricity to remote areas without the need to build and maintain expensive infrastructure for electricity transmission. Typical projects include solar, biomass, wind and small-scale hydro-electric energy.

According to the International Energy Agency (IEA), over a fifth of the world’s population lacks access to electricity, which governments consider to be a key step in meeting global targets for reducing poverty and providing basic human rights.

The IEA has found that providing electricity to rural populations by 2030 will require more than five times current investment levels.

The United Nations Environment Programme (UNEP) executive director Achim Steiner said in a statement that the urgency to electrify rural and urban areas in the developing world was one of the driving factors for investments in renewable energy.

“Whatever the drivers, the strong and sustained growth of the renewable energy sector is a major factor that is assisting many economies towards a transition to a low carbon, resource efficient Green Economy” he added.

The UNEP, which is one of the partner organisations for REN21, launched a sister publication called Global Trends in Renewable Energy Investment [2] on the same day.

The REN21 report said that developing countries invested US$89 billion in renewable energy in 2011, compared to $168 billion from developed countries. This marked a decline in the developing countries’ share of overall renewable energy investment, ending several years of relative growth.

With a 62 per cent growth rate for renewable energy investments, India was the exception, and topped the global list of fastest growing renewable energy investment by country.

Renewable energy sources supplied nearly 17 per cent of global energy needs in 2010, but about half of that amount is from traditional biomass as opposed to modern energy sources, noted the report.

Traditional biomass includes wood and other organic material gathered for burning in cookstoves. In developing countries, this practice has led to high levels of indoor air pollution and depleted natural resources in surrounding lands.

The report noted that traditional biomass use is declining as awareness of the problem grows and as communities invest in advanced cookstoves that use renewable sources and pollute less.

Global power generation capacity from renewable sources rose 8 per cent from 2010 levels to reach over 1,360 gigawatts (GW). This represents over a quarter of the world’s power generation capacity, and includes 970GW from hydro-electric dams.

Electricity from non-hydropower sources, dominated by wind and solar photovoltaics (PV), grew 24 per cent from 2010.

Most of the growth in non-hydropower renewable electricity – about 70 per cent – was in China, the United States, Germany, Spain, Italy, India, and Japan.

Over 400 experts contributed to the annual publication from the Paris-based REN21, which began in 2005 to promote the growth of renewable energy by providing global information on renewable industries, policies and investment.

The report found that while the number of policies to support renewable energy had grown – at least 118 countries had policies in place at the beginning of this year compared to 109 in early 2010 – the rate of new policy implementation has been steadily declining due to on-going global economic challenges.

Professor Udo Steffens, president of the Frankfurt School of Finance & Management said in a statement that renewables are starting to have a big impact on energy supply, but that good policies were needed to help the sector cope with symptoms of rapid growth such as big successes, painful bankruptcies and international trade disputes.

“This is an important moment for strategic policymaking as winners in the new economy form and solidify,” he said.

Despite flagging action on policy, the report said that most renewable energy industries experienced growth in 2011 or were poised for substantial growth in the coming years:

  • The wind industry led renewables for capacity growth with an increase of 20 per cent to about 238 GW. Developing countries dominated this growth – led by China, which holds nearly 44 per cent of the global market.
  • The solar PV industry, which generates electricity directly from the sun rather than using its heat, increased capacity by 74 per cent to reach nearly 70 GW. Notable trends include a shift toward utility-scale solar farms away from roof-top, small-scale systems, and growing solar markets in China and elsewhere in Asia. The European Union still dominates the PV markets despite shrinking government incentives and a manufacturing sector struggling from oversupply and falling profit margins.
  • Concentrated solar thermal power (CSP) companies installed over 450 megawatts (MW) in 2011 to reach a global capacity of 1,760 MW, primarily in Spain. CSP uses concentrated heat from the sun to drive turbines that produce electricity on a utility scale. Bargain PV prices and unrest in the Middle East slowed CSP growth, but construction picked by the end of 2011.
  • Electricity from geothermal energy reached 11.2 GW in 2011. Twice that amount of geothermal energy provided heat for buildings and industrial uses.
  • The hydropower industry increased global capacity by nearly 2.7 per cent, mostly in Asia. Increasingly, hydropower companies are installing systems that store excess wind and solar energy so that it can be used during times of peak demand.
  • Ocean energy technologies such as wave and tidal power plants have begun to scale up after years of research and development and pilot projects. With the addition of a 254 MW tidal plant in South Korea and a 0.3 MW wave plant in Spain, total global capacity reached 527MW in 2011. Other projects in the pipeline indicate rapid growth may be coming within the next few years.

The REN21 report noted that, while governments have historically neglected to link policies for energy efficiency and renewable energy – the “twin pillars” of sustainable energy planning – they are beginning to understand the importance of addressing the two issues together.

The more efficiently energy services are delivered, the faster renewable energy can become an effective and significant contributor of primary energy, said the report.

The UNEP’s Mr Steiner called for leaders at this month’s Rio+20 sustainability summit in Brazil to take note of the opportunities the renewable energy sector provides.

“Transforming sustainable development from patchy progress to a reality for seven billion people is achievable when existing technologies are combined with inspiring policies and decisive leadership,” he said.

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[1] Renewable 2012 Global Status Report

[2] Global Trends in Renewable Energy Investment


Property lending in the Philippines is booming too

Aside from the booming property market, the level of lending for purchasing has reach a new peak which just shows it reach a new high. I would think there are opportunities for serving both property and property lending.


From Businessworld Philippines

June 28, 2012

Property loans hit fresh peak

BANK EXPOSURE to the real estate sector — bulk of it in loans — hit a new high at the end of May, but stayed below the limit set by the Bangko Sentral ng Pilipinas (BSP), an official statement yesterday said.

BSP said in its statement that combined exposure to the property sector of universal and commercial banks, as well as thrift banks, “reached its highest level yet” of P538.141 billion by the end of the first quarter, 21% more than the P444.903 billion recorded the previous year and 3.77% bigger than the P518.614 billion at the end of December 2011.

Real estate loans acccounted for 97.4% of total exposure at P524.128 billion, up 21.03% annually from P433.050 billion and 3.6% from P505.867 billion at the end of December.

Investments in debt and equity securities, which made up the balance at P14.012 billion, were 18.2% more than the P11.854 billion of the previous year and 9.9% up from end-December’s P12.748 billion.

By industry, universal and commercial banks accounted for 76.9% of total exposure at P413.91 billion (P399.898 billion in loans and P14.012 billion in investments), while thrift banks made up the balance with P124.231 billion in loans.

Still, BSP noted the ratio of real estate loans to total loan portfolio, less interbank loans, “continued to remain stable.”

Real estate loans made up 15.19% of banks’ total loans as of end-March, compared to 14.73% the previous year and 14.52% at the end of December.

Hence, while bank exposure to the property exposure has continued to rise to new peaks, its proportion to total loans has remained below the 20% limit for universal and commercial banks set by Circular No. 600, which BSP issued in February 2008 in the wake of the Asian financial crisis.

Real estate loan-total loan ratio of universal and commercial banks stayed below that level at 13.07% as of end-March, compared to 12.31% the previous year and 12.42% as of end-December.

The same ratio for thrift banks, which do not have such limit, was 31.64% as of end-March, from 32.75% the previous year and 31.39% as of end-December.

The entire industry’s non-performing real estate loan ratio (non-performing real estate loans to total loans) eased to 5.11% as of end-March from 6.05%% the previous year, but was slightly up from end-December’s 5.01%.

Loans that universal and commercial banks extended were mostly for commercial purposes (67% at P267.9 billion), in contrast to those by thrift banks that were used to finance the acquisition, construction and improvement of residential units for occupancy by individuals or households (80.9% at P100.5 billion). — KAM

Article location : loans hit fresh peak&id=54293


The third option for a career

When I first got started working, a job at a bank was the goal. Maybe because my dad was a banker. Now with an ever more competitive market, jobs are far fewer and harder to get. Still there are new options. One is starting a social enterprise. You get a source of income while also helping the community.

June 27, 2012

Social entrepreneurship

The Department of Tourism recently launched its campaign on 100 and more reasons why it is more fun in the Philippines. This has made Filipinos everywhere feel more proud of their country and has created a way of enticing foreigners to come to the Philippines.

This is especially good for the economy, but if we want to be strategic about creating jobs to alleviate poverty, we have to think beyond the obvious.

Aside from targeting foreign tourists, I propose that we redirect our efforts to ensure that Filipinos stay in the Philippines not because of blind faith, nationalism, or patriotism but because of the many great things this country has to offer.

I am proposing social entrepreneurship and innovation, a more sustainable and results-oriented initiative. Rather than seek employment and depend largely on imports for the goods and services we need daily, we can create businesses that cater to these needs and consequently provide employment.

What we are experiencing now can be attributed partly to how we have been conditioned — that right after graduation, we should seek employment. Very often, the big dream is to land a job in a multinational company.

This is good; don’t get me wrong. But this opportunity is usually available only to the elite, whom the hiring criteria favor. The unemployment figures tell us that most of our graduates have not yet realized their dreams. Now is the best time for academe to advocate that starting a business is an option for the more than 500,000 students who graduate yearly.

Early this year, I had the opportunity to visit the Enchanted Farm of Gawad Kalinga (GK) in Angat, Bulacan. The Farm is GK’s platform to follow through what it had started, which is building homes for the community. Through the Farm, GK is providing livelihood to the community.

During that visit, I was inspired by how the community had been structured. Social entrepreneurs enable their adopted community to contribute to the huge task of nation-building. These social entrepreneurs are college students, fresh college graduates, and those who used to be employed but who later decided to pursue social entrepreneurship. They created jobs for the community by using raw materials sourced from the Farm.

In the Farm, I was pleasantly surprised to see a number of interns from other Asian countries, Europe and the Americas. They are there to learn not only about our culture but also (and more importantly) about the social enterprise platform of the Farm. They see much hope for the Philippines. Yes, they believe that Philippines has the potential to grow and become a developed economy.

Quite ironic, isn’t it? They see it, but we do not. As Tony Meloto, the man behind GK, puts it, “Is it always like this? That we Filipinos are the last to realize that being a Filipino is a blessing and that having the Philippines as our home is among the best gifts from God?”

His rhetorical questions made me realize that God had not made a mistake when He made us Filipinos. The best time to truly be a Filipino is now. We have to go back to the basics and appreciate that we are a nation with rich and vast natural resources, including some flora and fauna that can be found only in our country. We have to leverage on this to start our social enterprises that will provide jobs to the community.

The response of the students, faculty, and administration of the Ramon V. Del Rosario College of Business has been overwhelming. In fact, at the start of De La Salle’s second centennial, we will push for a year-long program of sustainable awareness and involvement in the Farm, putting up our own social enterprise in and for the community.

Florenz C. Tugas is the External Affairs Director of the Ramon V. Del Rosario College of Business of De La Salle University. A full-time faculty member of the Accountancy Department, he specializes in Auditing and Assurance and Management of Information Technology courses. He can be reached at The views expressed above are the author’s and do not necessarily reflect the official position of De La Salle University, its faculty, and its administrators.

Article location : entrepreneurship&id=54185

Business Relationships is a key success factor in the Philippines

Setting aside the political issues on how SMC, the country’s largest food and beverage company ended up with Danding Cojuangco, the current news of his selling his shares to his second-in-command Ramon Ang, tells you something of the special relationship between both people. And for any foreigner wanting to do business in the country it is important to realise relationships is a key success factor in establishing a business in the country.

Cojuangco sells 11% SMC stake to Ang


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Eduardo ‘Danding’ Cojuangco Jr. (right) and Ramon Ang during the recently held SMC stockholders’ meeting.
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Manila, Philippines –  Fourteen years after reclaiming the helm at San Miguel Corp. (SMC) in 1998, businessman Eduardo “Danding” Cojuangco Jr. formally relinquished his remaining stake in the diversifying conglomerate in favor of long-time ally and concurrent SMC president Ramon S. Ang.

The sale involved a total of 493.4 million shares sold at P75 each or a total of P37 billion. The shares were crossed at the stock exchange yesterday.

In a statement, Cojuangco said he sold his 11 percent stake in SMC to Ang on friendly terms. He, however, will remain as chairman and CEO of the company.

The shares which were sold to Ang originally formed part of the block of shares to be divested to Top Frontier Investment Holdings Inc. under a 2009 share option agreement.

Top Frontier, whose key players include former Trade Minister Roberto V. Ongpin, condiments king Joselito Campos and businessman Iñigo Zobel, decided to partially exercise the option with the purchase of around 3.7-percent stake of San Miguel.

With the purchase, Ang now owns 368.517 million shares in SMC.

The 77-year old Cojuangco described Ang as “a person in whom I have full trust and confidence and rightfully deserves utmost recognition for transforming the company into a highly diversified and profitable business conglomerate.”

“From the time I requested Ramon to join me in the company, he has continuously dedicated one hundred percent of his time and effort in ensuring the growth of the San Miguel Group to the benefit of its shareholders,” Cojuangco said.

Ang has been instrumental in shifting SMC from its dominant food and beverage businesses into vital and heavy industries such as power, fuel and oil, infrastructure, mining, telecommunications, airlines and airports.

SMC is targeting to rake in P1 trillion in sales by 2013, or double its 2011 level, as recent acquisitions and investments start to contribute to earnings.

Ang, for his part, has committed to continuously propel the growth of the company.

“Mr. Cojuangco offered the balance of the option shares to me and I accepted primarily for the following reasons: the San Miguel vision set by management during my term is far from being achieved, and; I have a continuing commitment to ECJ, the company’s stakeholders and the employees to see through the realization of this vision in the near future,” Ang said.

Cojuangco, who underwent a medical procedure in the United States in 2010 to correct an abnormal heart rhythm, said with Ang at the helm, he can now devote more time to his personal endeavors.

The sale ended years of long drawn-out battle with post-Marcos era administrations claiming Cojuangco’s stake was ill-gotten.

The Supreme Court in an earlier ruling finally declared Cojuangco as the true owner of the San Miguel shares.

The share sale also consolidates power in the hands of Ang and Top Frontier, which now owns around 60 percent of SMC.

Increase intake and fly over instead

The current news headline here down under is the problem of people drowning on boats coming to the country from Indonesia. The people on these boats are attempting to enter illegally into the country presumably to apply for refugee status. Aided by people smugglers who to maximise profit choose to use boats not worthy for sea travel but acceptable for bringing illegals to Australia. All sorts of discussions are being made in the Australian parliament to come up with a better solution but so far no compromise has been arrived at. So the smuggling and the drowning continues. In meanwhile here a novel new idea maybe they should consider strongly.


Hard figures back case to open gates

Jessica Irvine
Published: June 29, 2012

Australia‘s relative economic prosperity and low jobless rate have transformed us into a destination of choice for economic migrants and refugees alike. If you think that’s a problem, let me set you straight.

One in four Australians alive today was born overseas, according to the latest census results. In Sydney, it’s one in three. Migration has not only contributed to Australia’s economic success over the years but is the cornerstone of the brilliantly vibrant and diverse cultures in our local communities that are rarely reflected in our national debates.

While other advanced nations struggle to attract workers to their recession-ridden economies, Australia stands out as a country experiencing above-average migration growth, according to the Organisation for Economic Co-operation and Development‘s ”International Migration Outlook”, released this week.

Problem? Far from it.

”[The] positive role of migration in maintaining the size of the labour force in many countries is expected to become more important as more baby boomers retire,” the report states. ”By 2015, immigration – at the current level – will not be sufficient to maintain the working-age population in many OECD countries, especially in the European Union.”

One of the defining global narratives of the coming decades will be the struggle of ageing nations to rejuvenate their populations and provide for the needs of their elderly. But here in Australia we force young, willing hands in nearby countries to board leaky boats to take their chances in a cruel sea. That is not only morally shameful, it’s economically stupid.

Figures from the same OECD report prove decisively that job gains for migrants do not come at the expense of existing Australians.

Across the first half of the noughties, the employment-to-population ratio for foreign-born Australian men averaged 73.2 per cent. The average for native-born Australian men was substantially higher, at 78.8 per cent.

In the second half, this gap shrank. The average employment-to-population ratio for foreign-born men advanced to 76.3 per cent. But this did not come at the expense of the native-born, who saw their ratio also increase, to 80 per cent.

Because, for all the focus on asylum seekers, Australia’s overall migration program is heavily focused on filling existing skills shortages and, hence, is skewed towards younger working people. Australia’s total migration and humanitarian intake was 182,500 people last financial year. Of these, most – 92 per cent – came from the migration program.

Just 8 per cent, or 13,799 visas, were granted under the humanitarian program. Of these, most – 8971 – were granted to people seeking asylum from an offshore location. The number granted to people who had made their way to Australia first, by boat or plane, was 4828.

Australia’s refugee intake is not only small compared to its total migration intake, but also compared to the number of people who would like to seek asylum here. Australia received 54,396 offshore applications for humanitarian visas last year, meaning for every successful one, five others went unanswered.

Is it any surprise people get on boats? With such an undersupply of places relative to demand, a black market in people smuggling is the only natural result.

It seems distasteful, somehow, to apply an economic framework to a such a morally charged policy issue as asylum seekers. It is governments, after all, not markets, that decide the supply of migration places.

But people smugglers are a good example of the economic phenomenon of black markets. Black markets for products and services spring up where supply in legitimate markets is overly restricted. Just as alcohol prohibition in the US forced up the price of booze and fuelled criminal activity in the 1920s and ’30s, a shortage of humanitarian visas to Australia has encouraged people smuggling. People smugglers are today’s bootleggers, with tragic consequences.

The evidence shows, after all, that most people who arrive unlawfully by boat are eventually settled in Australia on protection visas – 83.3 per cent of the ”irregular maritime arrivals” in 2009-10, according to the latest figures from the Department of Immigration.

By far the best way to smash the people smugglers’ business model would be to expand the legal market for seeking asylum. It’s time to accept there is a constant, and even increasing, demand by people to seek asylum in Australia.

If we want to stop the boats, the best way might be to fire up the 747 turbo engines and simply fly people here, legally and safely, in the first place. If we want to deter desperate people from making a treacherous journey, let’s make it known in international refugee processing centres around the world: there is an easier path to Australia and an open door on arrival for those who follow it.

Sound radical? Perhaps the most bizarre aspect of this week’s debate on asylum seekers is that there is, in fact, tri-partisan agreement on just this point.

The Opposition Leader, Tony Abbott, promised this week to increase the humanitarian intake to 20,000 within three years of forming a government. The Greens issued a press release yesterday titled ”We Can Save Lives From Today” proposing much the same thing.

Just last month, the Minister for Immigration, Chris Bowen, told the International Association of Refugee Law Judges of his desire to progressively increase the humanitarian program to 20,000. As for why he had not already done this, Bowen cited budget constraints. Every additional 1000 humanitarian places would cost the budget $216 million. Increasing it to 20,000 would cost about $1.35 billion over the first four years.

And so it comes to this: what price asylum seekers’ lives?

It’s time for politicians to bite the bullet and agree to increase Australia’s humanitarian intake. As a rich nation with low public debt and so much to gain from migration we cannot afford not to do so. That politicians can agree on this central point and continue to squabble among themselves is not only deeply shameful, but the ultimate sign of the deep dysfunction that prevails in our nation’s Parliament.

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