MBA thesis
 

進口顯露出便宜的跡象，所以高貿易壁壘進行配給。因此，菲律賓經歷了國際收支危機，收入、就業、儲蓄幾乎持續平衡，投資增長處于停滯狀態。二戰后東南亞國家收入最高，菲律賓成為最貧窮的國家之一。然而，在20世紀80年代中期，它的經濟劫難遠遠落后于東亞鄰國，實現說服政府和商界精英進行重大改革。現在像該地區的其余部分，菲律賓已經接受了以出口為導向的增長和私營部門發展的政策。以減少宏觀經濟基本面債務比率，長期債務結構提高稅收和更健全的金融體系顯著改善。至今（1998年4月），盡管菲律賓地區的貨幣危機嚴重，但該地區經濟相對良好，在過去的十年中進行結構性改革，特別是提高金融市場的控制，降低了該國易受外部沖擊。比索貶值和貨幣危機，也將刺激處于困境的勞動密集型的制造業，鼓勵農產品和礦產品出口。  
 

Imports appeared cheap so were rationed by high trade barriers. As a result, the Philippines experienced almost continual balance of payments crises and income, employment, savings and investment growth stagnated. From being one of the highest income countries in East Asia after World War II, it became one of the poorest. However, its economic devastation in the mid 1980s and the realisation that it lagged far behind its East Asian neighbours convinced the Government and business elite to undertake major reforms. Now, like the rest of the region, the Philippines has embraced policies of export-led growth and private sector development. Macroeconomic fundamentals have improved significantly with reducing debt service ratios, longer term debt structure, improved tax effort and a more robust financial system. The relatively favourable performance of the Philippine economy to date (April 1998) despite the regional currency crisis, suggests that structural reforms over the past decade, particularly improved financial market control, have reduced the country’s vulnerability to external shocks. The depreciation of the peso, a result of the currency crisis, also should stimulate the beleaguered labour intensive manufacturing sector and encourage agricultural and mineral exports.

 

MACROECONOMIC PERFORMANCE

 

Since 1994, Philippine growth performance has improved dramatically relative to the early 1990s. The Philippines now looks likely to emerge from the Asian financial market turbulence of the second half of 1997 and early 1998 well placed relative to many of its Asian neighbours, although short term political developments will be crucial in this context. A key short term economic challenge is to control inflationary pressures resulting from the peso’s depreciation, so that a real depreciation is maintained and Philippine competitiveness is enhanced. Another challenge is to reduce interest rates towards levels prevailing before the depreciation, allowing normal growth to resume and investors to respond to opportunities presented by the peso’s depreciation. Further rationalising small and medium sized banks and liberalising foreign bank restrictions would help reduce bank interest rate spreads by stimulating bank competition. An additional short term challenge is to ensure that the problems of individual borrowers in servicing US dollar loans are isolated and prevented from generating a system wide impact. This will require speedy liquidation of bankrupt firms so their assets can be returned to#p#分頁標題#e#

 

productive activity and creditors can receive some compensation. Further tightening loan loss provisions and improving the means of detecting and dealing with corporate and banking weakness at an early stage may also help. In addition to these short term challenges, authorities must address some long term issues if the Philippines is to sustain growth. The Philippines’ poor savings performance, particularly the low rate of household savings needs improving. Combined with a more competitively priced peso, improved Philippine savings performance will help reduce the current account deficit. The authorities also need to adjust the composition of public expenditure by raising the share of infrastructure spending and reducing spending on personnel.

 

Executive Summary

 

TRADE POLICIES

 

The Philippines has increasingly opened to international trade over the last decade. Commitments to the WTO, the ASEAN Free Trade Area and APEC should help control the influence of vested interest groups trying to halt the ongoing process of trade liberalisation. Peso depreciation should also help maintain support for liberalisation. In recent years, semiconductors and microcircuits have driven export growth. Finished electrical machinery exports including computers and office equipment are becoming increasingly important. he peso’s large depreciation will significantly affect both exports and imports. In the medium term, if the real depreciation of the peso is maintained, exporters will have an incentive to increase local content and value added, deepening the integration of export oriented industries into the local economy. Demand for imports destined for final use in the domestic economy, particularly luxury goods, will decline due to higher prices and, in the short term, weaker income growth. By contrast, imports of intermediate inputs for export oriented industries are likely to grow in the short to medium term. Australia’s bilateral trade with the Philippines is small compared to trade with Indonesia, Malaysia and Thailand, but is growing rapidly. Australian exports to the Philippines are dominated by food, particularly dairy products and live animals and copper, coal, zinc and aluminium. Exports of telecommunications equipment have grown strongly throughout the last decade. In the short term, as agricultural imports are largely for domestic consumption, Australia’s agricultural exports are likely to be hit hard by the peso’s depreciation and the prospective slowing in economic activity over the next year or two. In the medium term, new and expanded opportunities are likely to arise as a result of the lifting of many trade restrictions on agricultural products. In the long term, if industrialisation really takes off, exports of industrial and construction raw materials and intermediate goods should grow. Exports of mining industry services also could become significant if mining reform finally proceeds.#p#分頁標題#e#

 

FOREIGN INVESTMENT

 

Foreign direct investment, FDI in the Philippines has increased rapidly since 1993, due to major liberalisation of the investment regime but still remains low by ASEAN standards. The most important sectors for FDI are manufacturing, banking, infrastructure and public utilities, where reform has been most rapid. In sectors such as mining and agriculture, where trade and legal reform and implementation are lagging, FDI flows have been weak. Dominant sources of Philippine FDI are Japan, followed by the USA. Australia’s FDI flows to the Philippines are small and volatile, with strongest growth occurring in the late 1980s and 1994 and 1995. In spite of the Asian financial market turmoil, 1997 was also a strong year for Australian FDI. The biggest FDI destination is manufacturing, but FDI in public utilities, infrastructure and industrial services also has grown rapidly in recent years.

 

Executive Summary

 

The major factors inhibiting further FDI in the Philippines include the relatively high cost of unskilled labour (less serious after the recent depreciation), lack of infrastructure, lack of support industries and concern about commitment to the reform process. Given the relative strength of Australia’s mining companies and their interest in investing in the Philippines, slow government decision making and review processes are a particularly important constraint to Australian FDI in the Philippines. Special economic zones increasingly are attracting investment to the Philippines and driving economic and particularly export growth. While comprehensive incentives packages contribute to the growth of zone investment, these incentives require rationalisation. Universal incentives applying inside and outside zones would be more efficient, causing firms to locate in zones only if proximity to suppliers, customers or infrastructure warranted this, rather than to obtain fiscal incentives.

 

BUSINESS ENVIRONMENT

 

Since coming to power in 1992, President Ramos has worked hard to reform the distorted and inefficient Philippine economy. Despite the challenges Asia’s financial crisis pose, the Government has won the backing of the international business and financial community for its prudent economic restructuring and market liberalisation. While the economic architecture is incomplete, the Government’s commitment to further economic reform, the country’s strategic location, its large, educated and highly trainable English-speaking workforce and liberal business laws and incentives provide a strong stimulus for doing business with the Philippines. President Ramos’ visit to Australia in 1995 reinforced growing Australian business recognition of the positive changes occurring in the Philippines. Australian companies are boosting trade and investment links with the Philippines despite the recent turmoil in Asia. With expected real GDP growth of around 4 per cent in 1998, the Philippines will be one of the region’s fastest growing economies. While a defensive strategy may be needed to survive short term economic fluctuations, particularly for exporters of luxury food and manufactures, Australian companies should prepare proactive, longer term strategies, including acquisition or merger, to be well placed for the return to stronger growth in 1999 to 2000.#p#分頁標題#e#

 

INFRASTRUCTURE

 

After decades of neglect, infrastructure fell into disrepair and eventually crisis in the early 1990s. Now the Philippines is becoming an Asian market leader in developing innovative forms of appropriate private sector infrastructure participation. The recently refined Build Operate Transfer, BOT law enabled the Philippines to solve its crippling power shortages. Granting private sector concessions for Manila’s water to two joint venture private suppliers has lowered tariffs, reduced the Government’s

 

fiscal burden and should improve water supply services significantly. While the road transport situation is near crisis with frequent traffic gridlocks in Manila, a number of toll road, light rail and other BOT initiatives are underway, which should bring real improvements over the next few years. The proposed restructuring of electricity embraced by the National Power Corporation, Napacor seems likely to break up generation into several generating companies which compete across an independent grid, very much like the Victorian model of the 1990s.

 

Executive Summary

 

The Philippine experience confirms that clear regulatory structures protecting consumer interests are required for communities to accept private sector participation in owning and managing essential and often monopoly services. Several central government bodies, with multilateral and bilateral aid agency

 

assistance, are acquiring the skills to create competitive markets for infrastructure services and develop efficient regulatory structures. However, the rapid increase in unsolicited private sector bids to supply infrastructure facilities in many sectors and provinces means that often officials, particularly in local government units are ill prepared for this complex task. It is essential that the government maintains control of this process and obtains the necessary technical assistance to avoid mistakes that could undermine public support for private sector infrastructure provision.

 

MINING

 

Despite surging international interest in Philippine mining in 1995 and 1996 in response to the 1995 Mining Act reforms, the sector still receives a lower share of foreign investment than its output share in the economy, and mining output and exports have stagnated. International exploration interest and expenditure in Philippine mining decreased significantly in 1997 and early 1998 as the mining reform process ground to a halt. Court cases and stricter environmental requirements after the Marcopper spillage, uncertainty created by the new indigenous peoples’ legislation and unresolved taxation issues have all prevented the issue of new mining contracts. However, foreign investment is urgently needed to upgrade the skills and technological capacity of the local mining industry, to increase its competitiveness and reduce associated environmental problems. Increased capital for new foreign funded mining developments also will provide employment and development in isolated regions. Rapidly restarting the mining sector reform process should be a priority for the new administration. If international mining investor confidence in this process is restored, Australian exploration expenditure in the Philippines should increase; some companies also may seek to reduce their exposure in Indonesia. The next challenge will be to provide an environment where investors have the confidence to establish operational mines. This development will see a quantum increase in mining’s contribution to Philippine employment, exports and government revenue. The demand for mining services, of which Australia is a competitive supplier, also will be strongly stimulated when mines move to this next stage of development.#p#分頁標題#e#

 

AGRICULTURE

 

Previously efficient and profitable export oriented coconut and sugar sectors were seriously undermined by Marcos regime monopoly trading policies, price and export controls and excessive tax regimes. Throughout the Marcos era, the overvalued peso, chronically neglected rural infrastructure, and failing research and extension services further eroded agricultural profitability, investment and productivity growth. Heavy protection insulated traditional agriculture like rice and corn growing from

 

competitive pressures. The result was slow output growth, falling exports, rising imports, low agricultural incomes and high domestic food prices. Given the pressure

 

Executive Summary

 

on limited agricultural land from the large and rapidly growing population, the Philippines has no comparative advantage in broad acre crops like rice or corn, but efficiently produces more labour intensive products like tropical fruits and vegetables. The Aquino administration’s comprehensive agrarian reform program, CARP, aimed to redistribute large land holdings by selling small farms to tenant farmers over the period 1988-98. However, new farm sizes are too small (averaging 2 hectares) to achieve economies of scale; prohibition on consolidation is inefficient; implementation has been slow; and debt burdens on new owners are high. Protracted legal battles over land valuations contribute to uncertainty regarding CARP outcomes, slowing new agricultural investment. Emphasising rice self-sufficiency focuses government agricultural support on a low return activity, slowing resource reallocation to more profitable, labour intensive crops and activities. Greatly increased public investment in rural infrastructure, particularly farm-to-market roads and improved extension and research services, credit access, market information and distribution and marketing infrastructure is needed to help farmers move out of low value, subsistence crops into more profitable

 

activities. Peso depreciation in 1997-98 has significantly improved prospects for agricultural exports like coconut products, fruit and vegetables, fish products and prawns. Import substitutes like rice, corn, pork, chicken and beef now require much less protection than they currently receive, despite useful reductions in agricultural trade barriers in February 1998. Analysis undertaken for this report shows that in most cases, quotas could be abandoned and tariffs reduced significantly, reducing the inflationary impact of depreciation. Depreciation therefore provides an opportunity for Philippine a thorities to reassess agricultural protection policy and improve the profitability of existing exporters, hopefully encouraging a more efficient allocation of agricultural resources.

 

IMPLICATIONS

 

The report concludes by drawing implications from recent economic developments in the Philippines for Australian government and business. The Ramos administration achieved much in five years, notably in trade, foreign investment, infrastructure and financial market reform, setting the economy on the path to long term sustainable growth, on the East Asian model. However, the previous four decades of poor policy and neglect will take some time to redress. Some key problems confronting the incoming administration are falling educational standards, high social inequality, continuing bias against agriculture, stalled mining sector reform, an improved but still inflexible wage setting system, inadequate infrastructure, low savings rate, structural current account imbalance, the inefficient and unpredictable legal system, official corruption and poor quality government administration.#p#分頁標題#e#

 

Implications for Government

 

Australia’s bilateral relations with the Philippines are excellent, reflecting our shared democratic institutions and common outlook on key regional, economic and security issues. New initiatives like the Philippine-Australian dialogue will increase people to people links; in future, rapidly growing trade, investment and educational links can be expected to further strengthen these ties. Australian-Philippine trade relations are growing strongly from a low base, due to the close complementarity of the two economies and falling trade barriers in the Philippines and Australia. This trend is set to continue in the medium to long term as past trade reform commitments are enacted over the next five years. Depreciation provides the Philippines with an historic opportunity to remove quotas and reduce

 

tariffs, particularly on sensitive agricultural imports. he Philippines is Australia’s fourth largest recipient of official development assistance, after PNG, Indonesia and Vietnam. Australian expertise in many areas of governance is relevant to the Philippines which faces numerous institutional strengthening and governance challenges. These include regulating and deepening financial markets, administering tax, controlling government expenditure, encouraging private sector participation in infrastructure provision, providing agricultural extension services, and regulating and taxing the mining industry.

 

Implications for Business

 

Trade Opportunities

 

In the short term, the 1997-98 peso depreciation and economic contraction due to high interest rates will damage Australian exports of consumer goods like dairy products, live cattle and beef. Modest peso appreciation in April 1998 may reduce the severity of this demand downturn. Australian exports, like copper, used by export oriented Philippine industries, should benefit. In the medium to long term, ongoing trade reform should generate expanded trade opportunities for Australian agricultural and manufactured exports. With its large, rapidly growing population and limited arable land, the Philippines has no comparative advantage in relatively low value, land intensive broad acre crops like rice, corn or sugar, which Australia produces efficiently. However, the Philippines should become an increasingly important exporter of tropical fruits and vegetables and processed foods. With depreciation, Philippine labour intensive manufactured exports should become increasingly competitive, while imports of more capital and technology intensive imports should rise as trade reform continues and investment expands. Increased Philippine awareness of environmental issues should generate opportunities for Australian firms providing environmental management services for

 

mining, forestry, agriculture, power generation, water supply and waste treatment. Ongoing reforms encouraging private sector infrastructure investment should provide opportunities for Australian construction firms and finance, management and regulatory system consultants with expertise in privatising infrastructure systems. Weak distribution and transport systems also provide opportunities for Australian firms with expertise in land and air transport, ports, distribution logistics and storage.#p#分頁標題#e#

 

Executive Summary

 

The opening of Philippine banking, insurance and other financial service sectors in recent years may accelerate as a result of the Asian currency crisis, providing more opportunities for Australian financial institutions. Australian educational institutions should be able to increase their modest exports of educational services, by establishing courses within the Philippines and providing more educational opportunities for Philippine students in Australia, particularly given the Australian dollar’s depreciation

 

against the US dollar.

 

Investment

 

Major factors attracting Australian investors to the Philippines include political stability, low labour costs, a relatively skilled English-speaking workforce, a large consumer market, reasonably high expected economic growth, government investment incentives and the relatively easy regulatory environment. Negative factors include slow government decision making, foreign exchange risk, restrictions on foreign ownership, infrastructure shortages, corruption, high company and personal taxes, concern about long term political stability, residual regulatory controls and slowing economic reform. Nevertheless, improvements over the past five years and reasonable expectations of further improvements make the Philippines an increasingly attractive investment destination. Impact of the Peso’s Depreciation on Potential Investors The peso’s depreciation should significantly improve the Philippines’ competitiveness as a manufacturing base and reduce the cost of local equity and assets. To date, most Australian investment has serviced the Philippine domestic market. Peso depreciation will reduce the profitability of domestically oriented sectors like construction, infrastructure, building materials, distribution, retailing and other services but increase the profitability of export oriented sectors like garments, electronics, agriculture, mining and many sectors producing import substitutes. While stalled mining reforms reduce international and Australian exploration interest and expenditure, if the next administration can restore quickly foreign mining investor confidence, exploration expenditure could substantially increase. With the peso’s depreciation, Philippine imports into Australia will be more competitive, creating opportunities for Australian importers to distribute and add

 

value to these products. Philippine direct investment to Australia is low, and probably will be flat after depreciation. Continuing reform and market opening should ensure prospects for increased Philippine-Australian trade and investment remain strong, and provide numerous mutually beneficial business opportunities. The peso’s recovery in early April 1998 appears to confirm the Philippines is weathering the currency crisis reasonably well and strengthens hopes of a full recovery in 1998-99. Strong bilateral relations and growing people-to-people contacts enhance the growing trade and investment relationship.#p#分頁標題#e#

 

CHAPTER-6

 

RELATIONS OF INDIA AND PHILIPPINES

 

RELATIONS OF INDIA AND PHILIPPINES

 

Political & Defence

 

India and Philippines formally established diplomatic relations on 26 November, 1949, shortly after both countries gained independence, Philippines in 1946 and India in 1947. The relations between the two countries are underpinned by shared values and commonalities such as anti-colonialism, South-South cooperation and the wide use of English; Philippines prides itself as the first democratic country of Asia and India as the largest democracy. During the Cold War, the policies of the two countries were divergent. Despite this, bilateral high level visits kept the relations steady and warm. Prime Minister Indira Gandhi made a stop-over visit to Manila in 1981 on her way back from Australia. President R. Venkatraman paid a state visit to Philippines in 1991.From the Philippines Vice President Diosdado Macapagal visited India in 1961. Starting with the nineties, frequency of summit-level meetings has increased. President Ramos visited India in March 1997 followed by the visit of President Arroyo in October 2007. From India, President Abdul Kalam visited Philippines in February 2006. Prime Minister Dr. Manmohan Singh visited Philippines in January 2007 to attend the ASEAN and East Asia Summits. He had bilateral meeting with President Arroyo. In addition, there have been interactions at the level of Foreign Ministers and other ministers and senior figures of the two governments. Regular foreign policy and security dialogue meetings (from 1994 and 2004 respectively) between the two countries have been taking place, the last one was held in October 2009 (Ninth Foreign Policy Dialogue and Third Security Dialogue) in Manila. The first Joint Commission between the two countries, at the level of Foreign Ministers, took place in New Delhi on 15 March, 2011. The Philippines supported India’s candidature for the non-permanent membership of the UN Security Council for the term 2011-12. Several Foreign Service officers of Philippines attended ASEAN diplomats’ course in Foreign Service Institute in New Delhi in November/December, 2011.

 

Several Indian navy ships and Indian coast guard ships have visited the Philippines in 2010 and 2011. Officers from the Philippines Armed Forces are attending courses in India and vice and versa. A National Defence College delegation visited the Philippines in May, 2011. First ever JDCC (Joint Defence Cooperation Committee) meeting was also held in Manila in January, 2012.

 

Potential for bilateral engagement has increased considerably in the current

 

global and regional environment and with deepening relations between India and

 

ASEAN in the context of India’s ‘Look East Policy’. Under India-ASEAN Eminent#p#分頁標題#e#

 

Persons’ Lecture Series, Ambassador Chandrashekhar Dasgupta and Admiral (Retd.)

 

Arun Prakash visited the Philippines to deliver lectures in the months of

 

October/November, 2011, respectively.

 

Economic and Commerce

 

The current era of globalization, characterized by liberal trade regimes followed by most

 

countries, has positively impacted on bilateral relations. Trade has also been growing. It

 

has reached US$ 1.3 billion by now. As per the latest trade figures for FY 2010-11, the

 

total growth rate is 23.57% at the total value of US$ 1,312.13 million with India’s exports

 

at US$ 882.74 million registering a growth rate of 17.89% and imports at US$ 429.39

 

million registering a growth rate of 37.15%. Required agreements / MoUs for facilitation

 

of economic and commercial relations such as avoidance of double taxation and

 

prevention of fiscal evasion, agreement for promotion and protection of investments,

 

MoU for cooperation in the field of Agriculture and related fields have been signed. The

 

India – Philippines Joint Working Group (JWG) on Trade and Economic Relations has

 

been meeting regularly under the joint chairmanship of Commerce Secretary and

 

Philippines Undersecretary for Trade and Industry. The last (Tenth) JWG Meeting was

 

held in New Delhi on 21-22 November 2008.

 

The first meeting of the Joint Working Group on Agriculture took place in New

 

Delhi in August 2008; the second JWG on the same subject is expected to take place in

 

Manila in the near future. The first meeting of the Joint Working Group on Tourism took

 

place in Manila in July 2008. The Philippines Airlines have started direct flights between

 

Manila and New Delhi since March, 2011. To facilitate faster growth of tourism and

 

people-to-people contacts, Prime Minister announced at the Hanoi India-ASEAN

 

Summit on 30 October, 2010 the tourist visa-on-arrival facility for the citizens of the

 

Philippines with effect from 1 January, 2011.

 

Economic cooperation is expected to be significantly enhanced by the

 

operationalisation of the India - ASEAN FTA in trade-in-goods which has come into#p#分頁標題#e#

 

effect from 1 June, 2011. Secretary, Department of Trade and Industry of the

 

Philippines, who is equated with the Union Minister of Trade and Industry, led a large

 

delegation to India in March, 2011, to attend the First India-ASEAN Business Fair in

 

New Delhi during the course of which he met his Indian counterpart. The First Meeting

 

of the India-Philippines Joint Working Group (JWG) on Health and Medicine was held

 

on 18-19 October 2011 at Manila.

 

Culture

 

A Cultural Exchange Agreement between the two countries was signed in 1969

 

under which a new CEP for the years 2011-13 was signed in New Delhi on 15 March,

 

2011. A number of events such as visits of dance troupes, film shows, painting

 

exhibition have been taking place even in the absence of CEP. Recently, Prof.

 

Nagasura Madale, anthropologist and consultant on special projects, Capitol University,

 

Cagayan de Oro City, participated in an ICCR-sponsored conference on ‘Cultural and

 

Historical Links between India and South-East Asia’ in Jakarta in October, 2010. Shri

 

Rabindranath Tagore’s famous play, ‘The Post Office’, was recently staged, after

 

adaptation for the Philippines audience, by the Philippines Educational Theatre

 

Association. An Indian sitar group, led by Shri Zunain Khan, and a sarod group, led by

 

Shri Abhijit Roychoudhury, participated in 3rd International Rondalla/Plucked String

 

Festival organised by the Philippines National Commission for Culture and the Arts in

 

February, 2011. A 7-member Odissi dance troupe, led by Padmashree Ranjana

 

Gauhar, gave two recitals in Manila in July, 2011. Under India-ASEAN Youth Exchange

 

Programme, 8 students from the Philippines visited India in the month of September,

 

2011. Journalists from the Philippines have visited India to participate in the Delhi

 

Dialogue-III and IV organised by the India in last one year.

 

ITEC

 

Philippines is also one of the beneficiaries of programmes under ITEC and

 

Colombo Plan. In 2011-12, 35 slots each under ITEC and the Colombo Plan have been

 

allocated to the Philippines. Utilization has ranged above 90% in the past 3 years. So#p#分頁標題#e#

 

far more than 800 Philippines nationals have benefited under these schemes, covering

 

a wide range of technical courses, such as rural development; agriculture; small scale

 

industries, banking, finance and management; quality control and marketing; planning

 

and public administration; textiles, computer software; research and development, water

 

resources management, etc.

 

60th Anniversary of India-Philippines relations

 

The year 2009 was celebrated as the 60th year of diplomatic relations between

 

India and Philippines. A series of activities took place during the year to commemorate

 

the occasion. The Federation of Indian Chambers of Commerce held a special function

 

in Manila to recognize the people and organizations that have contributed to the

 

development of relations between the two countries. The then President Arroyo graced

 

the occasion and delivered a speech.

 

Brief on India-Philippines Economic & Commercial Relations

 

1. TRADE

 

India and the Philippines signed a Trade Agreement in 1979. Growth of bilateral trade between the two countries had been slow till the late 90s, but has picked up in the last few years. Balance of trade has been heavily in favour of India. Trade however still remains below its potential. However, the visits by the Indian President (February 2006) and then the Indian PM (January 2007) to the Philippines and later by the Philippines President to India (October 2007), have acted as a stimulus to bilateral trade and investment links. Presently (2009-10) bilateral trade between India and the Philippines is US$ 1061.84 million of which US$ 748.77 million forms Indian exports to the Philippines and US$ 313.07 million is the component of India?s imports from the Philippines (Source: Department of Commerce, Government of India).

 

Major items of Indian exports are: Frozen buffalo meat (12.24%); iron and steel (9.53%); vehicles (8.21%); oil seeds and olea etc (8.05%).; rubber and articles thereof (6.85%); pharmaceutical products (6.56%); electrical & electronic machinery (6.20%); organic chemicals (3.91%) etc.

 

Major imports from Philippines are: electrical and electronic machinery and equipment (41.52%); mineral fuels and mineral oils (14.77%); newsprint paper and paperboard (10.10%); vehicles (6.99%); optical instruments (3.18%); etc.

 

2. INVESTMENTS India and Philippines signed an Agreement on Avoidance of Double Taxation and Prevention of Fiscal Evasion in 1990, and an Agreement for Promotion and Protection of Investments in 2000. Indian investments in the Philippines are mainly in the areas of textiles, garments, IT& ITes, steel, chemicals and pharmaceuticals. Philippine investments in India are in telecommunications, IT, real estate and reprocessing of waste and human resource development (management education). Following is the list of major investments between the two countries:#p#分頁標題#e#

 

Indian investments in Philippines:

 

??Indo-Phil Textiles: A joint venture of Birla Group, established in 1975 is primarily engaged in manufacture of yarn.

 

??Global Steel Philippines Inc. of the Ispat Group, in Iligian City, Mindanao province, with a capacity of 1.2 million hot/cold rolled coils. Total investment is Peso 13 billion (US$ 245 million) payable over a period of 8 years. The plant, which is also the largest steel plant in the Philippines, was inaugurated in February 2004 and has been exporting cold and hot rolled coils. A new product – steel plate – has recently been added to their product line.

 

??Bio-seed Research Philippines, belonging to DSCL Group, has been present in General Santos City, Mindanao, for the last 15 years. They produce seeds of corn, cotton, rice and hybrid vegetables and market them in the country. They also have research facilities for these seeds.

 

??HTMT BPO Center, belonging to Hinduja Group has been operating since 2003.

 

??Aditya Birla Group acquired an idle chemical plant in Jose Panganiban, Camarines Norte. The plant has been producing oleo-chemicals from coconut for use in detergents, pharmaceuticals and cosmetics.

 

??Garment manufacturing plants – there are a large number of these set up by Indians and persons of Indian origin in Philippines. Some of them have closed down following the end of textile quotas.

 

Pharma companies including Dabur Pharma, Torrent, Zydus Cadilla, Ranbaxy Laboratories and Claris Lifesciences have subsidiaries/rep offices in Manila to promote their products.

 

??Aptech Limited has one franchisee computer training center in Bacolod and one multimedia training center in Manila. They are in discussions for setting up more such centers in the Philippines.

 

??Aditya Birla Minacs (ABM), of Adita Birla Group, opened a BPO unit in Manila in August 2007.

 

??While several IT companies from India have already set up BPO operations in the Philippines and these include companies like WIPRO (recently opened its BPO operations in Cebu), TCS, L&T Infotech, Genpact, Infosys, Intelenet; some others like HCL, Tech Mahindra etc. are planning to set up operations.

 

??Aegis BPO, part of India?s Essar Group has acquired a California-based outsourcing firm, People Support Inc (Philippines) at a price of $250 million.

 

??M/S Lupin Limited of India acquired a majority stake of 51% in the local pharmaceutical company, M/s Multicare Pharmaceuticals Philippines, Inc in March, 2009. Lupin Limited produces generic and branded formulations and APIs for the developed and developing markets of the world and has a presence in Anti-TB, Diabetes, asthma segments etc.#p#分頁標題#e#

 

Philippine investments in India:

 

??J.V. Merida Ecological Industries: This joint venture was set up in 2001 in Bangalore, India, for processing of waste.

 

??Ayala Group teamed up with L&T for consultancy for construction of the Howrah road bridge.

 

??Philippine Wireless Inc. - Usha India Ltd: Set-up in India in 2000, the joint venture was primarily engaged in providing paging services.

 

??SPI Technologies Inc. (since taken over by e-PLDT), a provider of IT-enabled business process outsourcing solutions, expanded book services capabilities in India through the acquisition of Kolam Information Services in 2003.

 

??ZMG Signium War Howell of Philippines has set up an Indian subsidiary in Mumbai in 2003 – the company operates internet cafes and on-line video gaming.

 

??Ayala Group?s BPO company, LiveIT Solutions Inc., has acquired majority shareholding in Integreon Managed Solutions Inc. which has operations in the USA and India. LiveIt also invested in e-Telecare and acquired (100%) Affinity Express which have operations both in USA and India.

 

??Ayala Land has tied up recently with the Mahindra Group in developing a township in Chennai.

 

??Del Monte, Philippines has concluded a JV with the Bharati Group for investments in food processing plants in India.

 

3. PROJECTS EXECUTED BY INDIAN COMPANIES: During the last few years, Indian companies have successfully executed some small and medium-sized projects in the Philippines. These include:

 

KEC: This company implemented a contract for a 37 km. transmission line project in Quezon in 1995; a US$ 3.4 mn. contract for supply of galvanised steel towers toNational Power Corporation project Negros IV - Panay IV in November 1997; and a Single Circuit part of the “Supply & Delivery of 138 KV Single & Double Circuit for Leyte Samar Transmission Line Project” in 1998. Kalpataru: Kalpataru Power Transmission Ltd. was awarded the Double Circuit part of the Leyte Samar Transmission Line Project in 1998 which it implemented. Kalpataru was again awarded the Sangali-Pitogo (Zamboanga City) transmission line project in November 2005. Kalpataru won another contract for rehabilitation of typhoon-damaged power transmission lines in Leyte in 2007. In the past few years the company has undertaken and executed projects worth US$ 38 million. In March 2010 the company has been awarded a 230KV transmission line project on the sector Abaga-Kirahon (in Mindanao). The project is worth US$26 million and has a completion period of 450 days (15 months). The contract is effective as of 6th April 2010. The contract itself was awarded by the newly created National Grid Corporation of the Philippines (NGCP). Essar Oil: It was awarded a two-year contract in 1994 to bring in and operate a drilling rig to enhance steam production in a geothermal project.#p#分頁標題#e#

 

4. BILATERAL MECHANISMS

 

JWG: The India-Philippine Joint Working Group (JWG) on Trade and Economic Relations has been meeting regularly under joint Chairmanship of our Commerce Secretary and Philippines Undersecretary for Trade and Industry. The 10th JWG was held in New Delhi on November 21, 2008. A host of issues ranging from meat to mining and textiles to tourism were discussed at length during the JWG. Both sides agreed to target US$ 1 billion as the bilateral trade figure by the year 2010.

 

JBC: An India-Philippine Joint Business Council (JBC) was set up in 1994 and it held meetings seven times starting in 1995. The Sixth JBC meeting was held in Cebu on 9th December 2006 on the sidelines of the ASEAN Business & Investment Summit. The nodal agencies are the Philippine-India Business Council under PCCI on the Philippine side and the FICCI on the Indian side. The 7th JBC was held in Manila on October 21st, 2008 and was attended among others, by representatives of FICCI, Philippines Chamber of Commerce & Industry (PCCI), Department of Trade & Industry (DTI), Cebu Chamber of Commerce and Indian Chamber of Commerce. The JBC was informed (by the Indian Chamber of Commerce) about the new and improved procedures relating to clearance and issue of visas to Indian businessmen visiting the Philippines. The issue of delays in registration of Indian pharmaceutical products in the Philippines and the need to address this was raised by the representative of the FICCI.

 

Line of Credit

 

In July 2007, DEA has announced a US$ 15 million GOI line of credit to Philippines for gems and jewellery cutting/polishing machinery and equipment, and other equipment. A Draft Agreement has been sent to the Philippine authorities whose response is awaited.

 

Exim Bank of India separately extended a commercial line of credit of US$ 2

 

million to the Philippine Export Import Bank (Philexim). This credit line, which became operational in 2006, finances upto 90% of the contract value of goods from India. This credit line has, however, not so far been utilized by the Philippine side. 6. MAJOR AREAS OF COOPERATION Agriculture & Food Processing

 

India and Philippines have been cooperating in the field of agriculture under the framework of an MOU for Cooperation in Agricultural Sciences and Technology. The MOU signed in 1991 and expired in 2001. On 4th February 2006, during the visit of President Dr. A.P.J. Abdul Kalam to Manila, both sides signed a fresh MOU on Cooperation in Agriculture and Related Fields.

 

Another MOU for bilateral cooperation was signed between the Indian Council for Agricultural Research (ICAR) and the Philippine Council for Agricultural Forestry and Natural Resources Research and Development (PCCARD) in November 1976, which is of a permanent nature, and under which bi-annual work programmes are executed. Cooperation in this area includes study visits, training, consultancy, joint research projects, S&T management, soil and water management and transfer of technology. Cooperation under this MOU has been stalled since the Work Plan for the period 2003-05 was not signed owing to financial constraints of the Philippine side to implement the Plan.#p#分頁標題#e#

 

At the 9th JWG in Manila on 1-2 September 2005, the Philippine side informed that a proposal from the Philippine Coconut Authority (PCA) was sent to the Indian Coir Board for an exploratory mission of PCA to study the coir industry in India. The Indian side promised to facilitate an early visit.

 

Philippines has a major interest in safeguarding its agricultural export sector. As part of G-20, it worked closely with India at the Cancun Ministerial 2003. It participated in the G-20 Trade Ministers? Meeting in Delhi, from 18-19 March, 2005. Its delegation, led by Mr. Segfredo Serrano, Under Secretary, Department of Agriculture, inter-alia, comprised three Congressmen.

 

The 1st Meeting of the Indo-Philippines Joint Working Group (JWG) on Agriculture was held in New Delhi on August 21st, 2008. The Meeting was chaired by Ms. Bernadette, Under Secretary, Department of Agriculture from the Government of the Republic of the Philippines and Shri P.K.Mishra, Secretary, Department of Agriculture and Cooperation, Ministry of Agriculture of the Government of India respectively. A wide range of topics like dairy development, oil palm production, rice genetics, biofuels, coconut

 

by-products, processed food, bamboo, dryland agriculture and ICTs to improve production and income of rural farmers figured in the JWG discussions. The JWGs are slated to meet once in every two years.

 

Dairy cooperation

 

Milk production in the Philippines (over 11 million kgs) constitutes 22% of liquid milk consumption and 4% of total demand for milk products. The gap is met by imports (mainly skimmed / whole milk powder) worth approximately US$ 400 million annually, mostly from Australia and New Zealand, 70% of which accounted for by Nestle, New Zealand Milk and Alaska milk. Recently, some local companies have started importing milk and milk powder of Amul and other brands from India.

 

During President Ramos? visit to India in 1997, the Philippine side had a meeting with Dr. Kurien of NDDB. At the request of the Philippine Government, the National Dairy Development Board (NDDB) conducted a feasibility study in 1998 for a pilot project involving a capital outlay of US$ 10 million. However, the project could not take off. In October 2002 a 5-member team from the Philippine National Dairy Authority (NDA) visited India as part of the rice counter-trade deal with PEC. NDA team proposed a project for raising local milk production to 5% of market share by 2007. This was not found viable by NDDB due its small scale. A two-member Mother Dairy delegation also visited Philippines in November 2002.

 

The Administrator of NDA, and former Senator Leticia Ramos Shahani visited Anand in November 2003 for a FAO-NDDB Conference, during which bilateral discussions were held with NDDB. Senator Shahani, under the umbrella of the Dairy Development Foundation, an NGO, is encouraging women to make a “white revolution” similar to the one started by Dr. V. Kurien in Anand (Gujarat).#p#分頁標題#e#

 

The Philippine Carabao Centre, Department of Agriculture, and the Frigorifico Allana, Aurangabad, Maharastra have been through an informal agreement, producing high genetic buffalo using In-vitro embryos which are frozen and transferred to the Philippines for transfer to surrogate buffalos. The PCC is planning production of the embryos on commercial scale and bring them to Philippines.

 

At the 9th JWG Meeting held in Manila on 1-2 September 2005, the Philippine side informed that they were considering import of buffalos from India. At the 10th JWG, the Philippine side stated that the requirement for live buffaloes and buffalo semen had been posted on the web site of the Department of Agriculture and that interested Indian government agencies may respond to the advertisement.

 

Indian Exports of Buffalo Meat

 

Import of buffalo meat to the Philippines was approved by the Philippine Government in 1993 and is now a major component of our exports. In

 

2004, Philippines imported US$ 140 mn. worth of bovine meat, of which about 43% valued at US$ 61.70 mn. came from India. At present, five abattoirs from India, belonging to M/s Frigorifico Allana Ltd., M/s Al-Kabeer Exports Pvt. Ltd., and Hind Agro Industries Ltd. are accredited by the Government of Philippines to export buffalo meat to Philippines.

 

However, meat from India is singled out for outside agency inspection. Every now and then, pressure is mounted by the Philippine Hog Producers Organization, and the Philippine Cattle Raisers Organization, with the backing of the (Australian) multinational lobbies, to ban Indian buffalo meat on grounds of FMD in India. A Bill seeking to ban Indian meat imports was introduced in the House and the Senate in 2003, but lapsed on account of a combination of factors, including the hard lobbying by the meat processors and importers and the Embassy?s efforts. To ensure smooth export of Indian buffalo meat, we need to implement a long delayed policy measure of identifying FMD-free zones in India.

 

At the 9th India-Philippines Joint Working Group (JWG) Meeting held in Manila on 1-2 September 2005, we had requested the Philippine side to review the risk analysis for Indian buffalo meat to enable it to be sold in all consuming sectors. In a recent Order (July, 2008) the Philippines Government has permitted buffalo meat to be sold to other end users. At the 10th JWG, Indian side took note of this development and thanked the Filipino side for allowing the sale of Indian buffalo meat to the retail sector (supermarkets).

 

Railways

 

During 1975-79, RITES supplied 60 railway coaches which are now obsolete. An MOU on joint cooperation signed by RITES and Philippine International Trade Corporation (PITC) in March, 1997 for development of railways on counter -trade basis did not make any headway.#p#分頁標題#e#

 

Philippines has been working towards rehabilitation of six non-operational railway lines (only 479 kms out of 1296 kms are operational, besides metro and light rails). China is implementing the US$ 503 million North Luzon Railway project (Manila-Calumpit) with its own funding of US $ 400 million. In June 2006, Philippines signed an MOU with China for implementation of another project, the South Rail Project.

 

The Philippine National Railways in 2003 signed an MOU with M/s Thaipicon Industry Co. Ltd. (a Thai company) to undertake the feasibility study for the First segment of Phase 1 of Mindanao Railway Project (Cagayan de Oro to Iligan, 120 kms). M/s Thaipicon in turn signed an MOU with IRCON for joint implementation of this project. IRCON provided technical inputs in preparation of the feasibility report. At the 9th JWG Meeting in Manila, the Philippine side informed that funding for the project was still not tied up.

 

IRCON also signed an MOU with the Philippine National Railways in 2003 to implement the Final Segment of Phase I of Mindanao Railway Project (Iligan-Zamboanga, 576 kms) through counter trade with IRCON as the main contractor. At the 9th JWG Meeting in Manila, both sides agreed to continue to explore the possibilities of funding through counter trade of commodities, or any other means. It was also agreed to further explore the areas of bilateral cooperation for development of railway infrastructure in Philippines.

 

At the 10th JWG, the Indian side informed that the modality of counter-trade would not be feasible. It was also felt that efforts should be made to renew the MOU, update the feasibility study and explore possibilities of financial assistance/ grant from international funding agencies like ADB.

 

Information Technology

 

Philippines for a long time viewed India as a competitor in the IT sector. This scenario has changed over the past couple of years with the realization that there was huge potential for both countries to collaborate in this sector for mutual benefit. Areas of IT collaboration could be disaster recovery centers; development of software; animation and graphics for off shore markets, particularly USA and for development of IT-based curriculum.

 

Exchange of IT delegations: An IT delegation from the Philippines visited India in February 2001 coinciding with Elitex and NASSCOM IT Fairs in Delhi and Bombay. A three-member University of Philippines (UP) delegation, led by its President, Mr. Nemenzo, visited India in October 2002. The visit led to the signing of an MOU between UP and Andhra Pradesh Government?s Institute of Information Technology Enabled Services and Training for development of an IT-based curriculum in 2003. A 17-member (JBC) Philippine business delegation with a large contingent from IT sector, including Dr. Bernado Villegas, Dean of the University of Asia & Far East, visited ICT locations in Hyderabad. The CII arranged an IT Round Table for them. The Chairman of the Commission on ICT Mr. Virgilio Pena, visited Hyderabad to attend the South Asia Public Sector ICT Summit from 23-25 January 2005. The event was jointly organized by UNDP, National Institute for Smart Government and CISCO Systems. Mr. Pena was a Guest Speaker at the Summit. At the invitation of the Philippine side, the Vice-President of NASSCOM, Shri Sunil Mehta, attended the 5th e-Services Philippines 2005 held in Manila on 17-18 February 2005. President of NASSCOM Shri Kiran Karnik, addressed, via video conferencing, the International Conference and Exhibition on Business and ICT in Cebu 20th – 23rd June, 2005. A 9-member delegation from Cebu ICT visited Bangalore and Hyderabad on a study tour from 6-12 March 2005 with the aim of benefiting from Indian model of IT education and to promote the Cebu ICT Exhibition 22-23 June 2005. A NASSCOM delegation led by its President Mr. Kiran Karnik visited Philippines from 3rd to 7th September 2006. A Philippine ICT Outsourcing Mission visited India from 18-25 September 2006. A 13-member delegation of the Business Processing Accociation of#p#分頁標題#e#

 

the Philippines (BPAP), led by its Chairman Mr. Fred Ayala, visited India to attend the “India Leadership Forum” organized by NASSCOM in Mumbai from 7-9 February 2007.

 

Indian presence in Philippines:

 

The NIIT, in partnership with local companies, operated IT education centres in Manila under franchise agreements since 2001. However, due to management related differences, they closed down the centers in 2004. They are, however, planning to come back to Philippines. APTEC had also operated similar centres in Manila but closed them down in 2004. Aptech has subsequently set up one franchisee computer training center in Bacolod and one multimedia training center in Manila in 2006. They are in discussions for setting up more such centers in the Philippines. In 2003, the Hinduja Group acquired controlling interest and management control in a call center C-Cubed, and opened another call center in 2006. Daksh e-Services of India set up a call centre employing 1000 people in Manila in 2004. This center was taken over by IBM immediately thereafter and is now known as IBM Daksh. Java Softech, Hyderabad, set up a subsidiary, M/s JSPL Philippines, Inc., in 2004 for specialized solutions in areas, such as micro-finance, hospitals and security. Polaris Software Lab Ltd., Chennai, has partnered with Progressive Software (ProSoft), Inc., (a local software integrator) and Sun Microsystems Phils. to market its banking software solution, the Intellect Suite, in Philippines. TCS is involved in the computerisation of the Makati Stock Exchange. Nucleus Software is implementing software projects for banks in Manila. Larsen & Toubro Infotech is implementing a software project for Chevron. Infosys has shifted a small unit from Bangalore to Manila and has plans to expand their operations here. As stated earlier, several other Indian companies like WIPRO, HTMT, L&T Infotech, Aditya Birla Minacs and Genpact have already set up their BPO operations in the Philippines.

 

At the 9th JWG in Manila on 1-2 September 2005, the Indian side agreed to a Philippine request for an MOU for establishment of a Joint Working Committee which will be responsible for formulating and implementing programmes and addressing common problems in IT sector. There was a reiteration at the 10th JWG (November 21, 2008, New Delhi) about the need for expediting the signing of the MOU.

 

Pharmaceuticals

 

The Philippine pharmaceutical market which is valued at US$ 1.5 billion, is heavily dependent on bulk importation of basic raw materials, chemicals, semi-finished and finished products from US, Europe, Canada and Australia, among others. Annual imports are about US$ 450 million. Manufacturing merely involves the formulation and processing of drugs and pharmaceuticals into various forms and dosages, repacking of imported bulk drugs and for distribution. Since bulk of the imports are from multinational companies, medicine prices in the country are about 5-15 times higher than those in India. India?s pharmaceutical exports to Philippines were US$ 31 million in 2005-06 as compared to US$ 14.46 mn. in 2002-03. There is a#p#分頁標題#e#

 

strong multinational lobby working against imports of inexpensive medicines from India, cashing in on low image conveyed by Indian moneylenders in this country. Allegations of Indian medicines being substandard or fake had to be refuted by Embassy frequently.

 

The Philippine International Trading Corporation (PITC), a government agency, has been importing medicines worth about US$ 1.5 million a year from India for the last few years. These medicines are channeled for supply to Government hospitals in Philippines. In her Government?s programme after elections in 2004, President Arroyo promised to provide medicines at cheaper, affordable prices. Hence, she has mandated the PITC to expand parallel importation of medicines and to supply them through “Boutika Ng Bayan” retail outlets, 2000 to 3000 of which are planned to be opened in the next few years. So far, 1500 outlets have been opened/franchised by PITC.

 

The Chairman of PITC, Mr. Roberto Pagdanganan, led a delegation, at the invitation of CHEMEXCIL, to attend a Buyer Seller Meet in Mumbai from 3-5 November 2004. Besides meetings with heads of Indian pharmaceutical companies, the delegation also visited pharmaceutical plants in and around Mumbai. The PITC?s Chairman signed an MOU with Pharmexcil (Pharmaceutical Export Promotion Council) for working together to realize mutual objectives, including facilitation of import of medicines by PITC from India, training of PITC?s technical officials at the National Institute of Pharmaceutical Education and Research (NIPER) in India and provision of effective distribution channels in Philippines for distribution of quality drugs at affordable prices by PITC.

 

A joint business delegation of CHEMEXCIL and PHARMEXCIL visited Manila from 6-8 March 2005 to promote export of Indian drugs and pharmaceuticals, among other products. A Business Meeting and One-on-One Business Matching, organised by the Mission on 7th March, 2005, in association with the Philippine Chamber of Commerce and Industry (PCCI) and the Philippine International Trading Corporation (PITC), received overwhelming response. PITC Chairman Mr. Roberto Pagdanganan spoke highly of Indian pharmaceutical industry and its top quality. Interest was expressed by Philippine companies in joint ventures with Indian companies for setting up of pharmaceutical plants in the Philippines. In a meeting with BFAD Director, Dr. Appaji, Executive Director of PHARMEXIL, invited a BFAD delegation to visit drug control facilities and pharmaceutical plants in India to have first-hand knowledge of the quality-standards observed in these facilities.

 

At the 9th JWG in September 2005, the Indian side requested Philippines to reduce processing time for BFAD registration of Indian drugs. The Indian side also agreed to look into a Philippine suggestion that India consider selling affordable agro-veterinary products in Philippines.#p#分頁標題#e#

 

With the signing of an MOU facilitating the entry of cheap and affordable medicines from India to the Philippines during the recent visit of the Philippines President to India in October, 2007, further cemented by the

 

very recent signing of the ?Cheap Medicines Bill? by President Arroyo, it is expected that not only greater volumes of Indian medicines but more Indian pharmaceutical companies would now be entering the Philippines. Lupin Limited (a leading Indian pharmaceutical company) in March, 2009 acquired a majority stake (51%) in one of the local pharmaceutical companies, M/s Multicare Pharmaceuticals Philippines Inc.

 

Herbal Medicine:

 

Cooperation in the field of herbal medicine was raised by the Philippines in the JWG in 2002 for identifying experts for initial exchanges, and for drawing an inventory of available herbal technology in both countries. Lists of names of Indian and Philippine experts were exchanged. At the 9th JWG in Manila on 1-2 September 2005, the Philippine side presented a proposal to (i) elevate the level of raw materials for pharmaceutical products at standardized extract level, (ii) ensure consistency of active ingredients through the process of standardization of extract, and (iii) provide training for technology transfer to a select group of herbal product manufacturers. For this purpose, both sides agreed to set up a small joint working group. The Indian side also requested market facilitation for Indian Ayurvedic, Unani and Homoepathic medicines and drugs in Philippines. Himalaya Herbal Healthcare has recently started distributing its healthcare products like shampoo, cleansing creams, soaps, moisturizers etc. through drug distribution chains like Watsons.

 

Energy

 

Philippines? energy consumption in 2003 was 195.9 MMBFOE. Philippines is dependent on imported energy for most of its energy requirements. Net imports were 121.8 MMBFOE in 2003, or 46.7% of the country?s requirements. Oil imports were 116.7 MMBFOE in 2003 and coal imports 21.8 MMBFOE. Philippines is estimated to have a total of 9 billion barrels of fuel oil equivalent (BFOE) recoverable petroleum resources. Oil production is negligible. Gas is being brought out from the Malampaya gas fields (94,803 million standard cubic feet in 2003). In 2003, Philippines met 18.6% of its energy requirement from geothermal energy and 11.9% from hydropower. Renewable energy resources such as solar energy, wind energy, bio fuels such as ethanol play a major role in the gross energy requirements of the country. The total supply from these resources was 80.3 MMBFOE in 2003.

 

In the First Petroleum Contracting Round which commenced in August 2003, the Philippine Government offered 46 blocks in potential oil and gas bearing areas, mostly offshore, to foreign companies, and held roadshows for attracting foreign investment. Consequently, a number of foreign and local oil and gas exploration and production companies had expressed interest, and some are already involved in a few projects. In July 2005, one#p#分頁標題#e#

 

of the contracts was awarded to an Indian company, M/s Laxmi Organics Ltd. for exploration/development of oil in Mindoro-Cuyo Basin on Mindoro Island. The Second Petroleum Contracting Round-2 launched on 31st August, 2005 is offering four areas in petroleum sector, 11 projects in geothermal energy sector and 7 projects in coal sector for exploration and development.

 

Philippines plans to lay a 100 km gas pipeline from Batangas (Malampaya) to Metro Manila for a power station by 2007 and develop CNG distribution network for motor vehicles in Manila. Two MOUs were signed in September 2003 by the Gas Authority of India Ltd. (GAIL) with DOE, and Philippine National Oil Corporation (PNOC-EC). The scope of these MOUs include cooperation in upstream projects in the Philippines and India, and the Philippines? downstream gas sector, which includes pipeline projects, gas distribution, as well as liquefied natural gas (LNG) importation. Owing to some unresolved commercial issues in implementing the Batangas-Manila Gas Pipeline Project, the project has been put on hold. Meanwhile a consortium working on the Malampaya natural gas project -- viz. Shell Petroleum Exploration BV, Chevron Texaco and PNOC-Exploration Corp. have been assigned to implement setting up of a mother and daughter CNG stations to accommodate about 200 CNG-run buses initially.

 

Philippines plans to import about 2000 CNG buses in the next few years and has already signed an MOU with China for import of about 150 buses on soft credit terms. M/s Ashok Leyland of India has tied-up with Philippine transport companies to supply its CNG buses. They had provided a demonstration CNG bus for test trials in Philippines in 2004. Bajaj also sent two CNG-run demonstration 3-wheelers to Philippines for test trials. The full-scale introduction of CNG buses is running behind schedule as the CGN supply infrastructure is still not in place.

 

At the 9th JWG Meeting in Manila in September 2005, the two sides also agreed to the creation of a working group that would study areas of cooperation on energy including renewable energy. The Philippine side proposed possible renewal of the MOU signed between GAIL and the Philippine National Oil Corporation – Exploration Corporation in 2003 for the development of the natural gas industry. At the same Meeting, we had conveyed GAIL?s specific areas of interest in the Philippine natural gas industry, which include participation in proposed Batangas-Manila gas pipeline projects, development of city gas distribution network and CNG infrastructure for vehicles, participation in new gas exploration and production projects, technical services, participation in LNG receiving terminals, and training by GAIL for Philippine officials in natural gas and CNG.

 

Renewable and Non-conventional Energy Resources

 

Despite its limited fossil energy resources, the Philippines have tremendous potential of renewable energy in the form of geothermal, hydro, wind, solar, ocean and biomass. Renewable energy has a significant role to play for#p#分頁標題#e#

 

the energy sector to attain its two-fold agenda of energy independence and implementation of market reforms. Micro-hydro and solar energy are considered as viable alternatives in isolated, far-flung islands of Philippines which are not connected to grids. Philippines has a well developed geothermal energy sector and is the second largest producer of geothermal energy after USA. The Philippine government is promoting Jatropha plantation for biodiesel production in a big way. It has already allotted 4 million hectares forest land for this purpose and is encouraging private sector and farmers to avail of the opportunity.

 

An MOU between Ministry of Non-Conventional Energy Sources (MNCES) and the Philippine Department of Energy was signed in February 1996 and the Committee set up under the MOU met once in 1997. A pilot 1 MW wind power project in Oriental Mindoro, proposed in 2002, did not materialize due to non-submission of detailed project report by the Philippines. The MOU has since lapsed and a draft for its renewal is at an advanced stage of finalization.

 

At the 9th JWG Meeting in Manila, the Philippine side submitted proposals for cooperation in the renewable energy sector. These proposals include:

 

a. Set up wind power projects in Ilocos Norte, Aklan, Siquijor and Surigao.

 

b. Conduct of feasibility studies, provision of anemometers and appropriate measuring equipment.

 

c. Satellite mapping, geodata information system and other information technology based activities for renewable database exchange.

 

d. Cooperative ventures in the local production of solar photovoltaic panels.

 

e. Sourcing of turbines for wind and hydro power development.

 

f. Technical cooperation in hydropower, biomass and ocean energy.

 

g. Establishment of a policy and regulatory framework that would mainstream clean fuels (biofuels, ethanol, CMEs, etc.).

 

h. Establishment of market access in India for clean fuels.

 

i. Conversion of jeepneys to run on CNG.

 

j. Cooperation on technology transfer for the manufacture of ethanol from different feedstock.

 

k. Cooperation in geothermal energy development. Philippines is the second largest producer of geothermal energy in the world. It has expertise in the fields of geo-scientific assessment, drilling and technical development and resource management.

 

At the 10th JWG held in New Delhi (Nov 21, 2008), both sides agreed to identify specific activities for cooperation under the MOU. It was also agreed that while the Indian side would prepare concept notes on wind, biofuel, solar energies, the Philippine side would do so on geo-thermal energy technology.#p#分頁標題#e#

 

Tourism

 

Philippines attracted 2.6 million tourists in 2005 and has targeted 5 million by 2010. Philippines has plans to attract Indian tourists to the country, and is in the process of improving its tough visa regime for Indian nationals which has

 

been a major inhibiting factor. As part of this plan, a delegation of travel operators from India, sponsored by the Philippine Embassy in New Delhi, visited the Philippines in July 2006. A second delegation of over 60 Indian travel operators visited Philippines in January 2009.

 

India and the Philippines signed an Agreement on Tourism Cooperation on 4th February 2006 during the visit of President A.P.J. Abdul Kalam to Manila. Recently a 2-member delegation from India visited Philippines (July 3-4th, 2008) and participated in the First Joint Working Group on Tourism between India and the Philippines.

 

Civil Aviation

 

At the Philippine Government?s request made in September 2003, bilateral talks to update the 1949 bilateral Air Agreement were held in New Delhi on July 19-22, 2005. Both sides signed an MOU to commence direct flights via Bangkok with fifth freedom rights: Agreed points of call are: for Philippine carriers Delhi, Mumbai, Chennai and Kolkata, while for Indian carriers, Manila and three other destinations. Each side can fly seven times a week. Neither Indian carriers nor Philippine Airlines have started direct flights yet. The Philippine Airlines has announced its intention to commence direct flights to New Delhi 3 days a week commencing March, 2011.

 

Mining

 

Philippines is endowed with abundant mineral resources. It ranks third in the world in gold, fourth in copper, fifth in nickel and sixth in chromite deposits. It also has deposits of lead, zinc, iron ore, coal, and manganese ore. Global potential mineral deposits is estimated at US$ 840 billion. The Mining Act of 1995 had sought to open up the sector for foreign investment. However, owing to legal cases against it, the Act could not be implemented. In December 2004, the Supreme Court of the country upheld the constitutionality of the Mining Act, following which the Philippine Government has embarked on a strong campaign to promote the mining sector. A total of 23 major mining projects valued at US$ 6 billion and another 37 minor projects valued at US$ 1 billion are on offer for attracting FDI. At the 9th JWG in September 2005, the Indian side suggested that Philippines should hold a road show in India to promote mining projects, but this has not yet materialized. A few Indian companies, including M/s Nathurmal, M/s V.S. Dempo of Goa, M/s Viraj Profiles Limited have shown interest in investing in joint venture or 100% owned mining projects, mainly for iron ore and nickel. At the 10th JWG the Indian side welcomed the proposal for a Road Show in India and also informed that the Federation of Indian Mining Industry (FIMI) would proceed further in the matter.#p#分頁標題#e#

 

Gems and Jewellery

 

Philippines is one of the world?s biggest sources of gem stones. At the 8th JWG In February 2004, the Philippine side proposed cooperation with India in gem stone cutting and polishing equipment under a soft loan package/technical assistance package. Subsequently in October 2005, we had conveyed to the Philippine side that the National Small Industries Corporation Limited (NSIC) would be able to supply machinery and equipment for gems and jewellery cutting and polishing to SME?s of Philippines on commercial terms. In July 2007, a GOI line of credit of US$ 15 million had been announced by DEA for financing the supply of gem stone cutting/polishing equipment. The draft agreement to operationalise the LC is pending with the Philippine side who have promised to look into it at the recently held 10th JWG.