MARCH 17, 2015

Presented by

ROBERTO V. GARCIA
Chairman and Administrator, Subic Bay Metropolitan Authority

The Philippine
Economy in 2014

THE GOOD NEWS

The Philippines is the Next Asian Miracle
and a global model in fighting corruption, as

it emerges from decades as a regional

economic laggard.

Jim Yong Kim

World Bank President
July 15, 2014

PH GDP growth is second only to China in Asia

2000 - 2014 PH GDP Growth

PH GDP Growth
2010

7.7%

2011

3.7%

2012

6.8%

9.0
8.0
7.0
6.0
5.0
4.0

2013

3.0

7.2%

2.0

2014 (FY)

1.0

6.1%

0.0

2014 (4Q)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

6.9%

Source:

Ease of Doing Business in PH improves

World Bank
Ease of Doing Business

Report 2014

+30

Out of 189 countries:

From #138 to 108

+6

Out of 148 countries:

From #65 to 59

+5

Out of 152 countries:

From #61 to 56

+10

Out of 177 countries:

From #107 to 97

World Economic Forum

(2013/2014)
Global Competitiveness
Index
Economic Freedom of the
World
2013 Annual Report

2013 Index of Economic

Freedom

PH becomes more competitive

PHL Jumps to 59th in

Competitiveness Index
Country

Rank

Singapore

South Korea

23

Malaysia

24

China

29

Thailand

37

Indonesia

38

Philippines

59

Vietnam

70

Cambodia

80

Laos

81
Source: RAPPLER.COM

Credit rating encourage investors in PH economy

2013

2014
BBB-

BB+

Outlook:
Stable

BBB
BBB-

Outlook:
Stable

Baa3

Ba1

Outlook:
Positive

PH: Asias most popular expansion destination

Source: Survey Conducted by the US Chambers of Commerce in ASEAN, Manila

Bulletin, September 4, 2012
S

Philippines hits highest FDI

2014
US$ 6.2 B
(63% higher than 2013)

2013
US$ 3.8 B
2012
US$ 3.2 B
2011
US$ 2.0 B
2010
US$ 1.1 B

Source:

SBMA TODAY
Key Performance Indicators

Revenues Per Strategic Business Unit

Big revenue gains across all Freeport business sectors
FPI

2013

2014

Variance

Maritime &
Logistics

626.55

908.60

45%

Industrial &
Commercial
Leases

996.86

1,115

12%

Tourism

12.15

19.61

61%

Total Operating
Revenues

2,013

2,442

21%

11

I. Maritime / Logistics Strategic Business Unit

2014 vs. 2013
Classification

2013

2014

Variance

Actual Revenues

PHP626 M

PHP908 M

45%

Containerized Cargo
(in TEUs)

37,469

77,177

105%

Non-containerized
Cargo (in MTs)

2,404,649

6,112,644

154%

No. of Ship Calls

2,177

2,591

19%

Gross Registered
Tonnage

33,591,875

40,147,025

20%

12

Port Expansion
Active participation in the Cabinet Cluster on Port Congestion and
implementation of E.O. 172, designating Subic as alternate to Port of
Manila
To attract more shipping lines, harbor fee and berthing fees were reduced
by 83% and 88%, respectively for a period of six (6) months
Hosting of Traffic Summit with operators and drivers of cargo-hauling
companies to discuss measures on ensuring efficient traffic flow of

container trucks in the Freeport and avoiding congestion

Aggressive marketing to increase port volume through speeches with the:
Association of International Shipping Lines
Chamber of Accredited Customs Brokers
Clark and AFAB locators
Philippine Ship Agents Association
8th Philippine Ports Authority Conference on Shipping and Ports

13

SUBIC PORT IS NOW CONNECTED TO THE WORLD!

NYK

SITC

MAERSK

APL

WAN HAI

Kaohsiung

Manila

Tanjung

Subic Bay

Kaohsiung

Subic Bay

Subic Bay

Manila

Manila South

Manila North

Manila

Jakarta

Subic Bay

Singapore

Manila South

Ho Chi Minh

Xiamen

Singapore

Surabaya

Subic Bay

Singapore

Busan

Jakarta

Kaohsiung

Hong Kong

Osaka

Manila North

Surabaya

Cebu

Keelung

Shimizu

Manila South

Busan

Laem Chabang

Taichung

Nagoya

Shanghai

Vostochiniy

Batangas

Port Kelang

Yokohama

Ningbo

Nansha

Busan

Taipei

Yokkaichi

Hakata

Tagoloan

Tokyo

Kobe

Hong Kong

Yokohama

Tokyo

Chiwan

Nagoya

Laem Chabang

Malalag, Davao

Chiba

Shanghai

Yokkaichi
Shekou
Cebu

14

II. Industrial & Commercial Leases Strategic Business Unit

Investment Promotion

KPI

2013

2014

2014
vs 2013

Total Approved
Committed
Investments
(NEW PROJECTS)

PHP 3.6 B

PHP 18.5 B

414%

Cumulative
Investments
(1992-2014)

US$ 8.7 B

US$ 9.1 B

5%

15

Territorial expansion under E.O. 675 in cooperation

with Local Government Units
10,000 hectares in San Antonio,
Zambales, ideal for tourism and
resort development

THIS SITE

50 hectares of coastal land in Subic,

Zambales, ideal for shipbuilding and
ship repair
400 hectares of land in Castillejos,

Zambales, viable for industrial

development for light manufacturing
industries and warehousing

THIS SITE

900 hectares

of Olongapo City
viable for commercial / residential,
mixed
use,
and
eco-tourism
development

THIS SITE

16

2014 Industrial and Commercial Development

PHP 11.4 B committed investment

356 jobs for manufacturing sector
388 jobs for commercial sector

HANJIN additional jobs in 2014: 7,537

Total no. of workers: 25, 704

Investment Promotion Initiatives

Supreme Court ruling upholding RP Energys coal power in Barangay Cawag,
Subic, Zambales paving the way for the construction of the plant which will
provide adequate and lower priced power to the Freeport.
Pastolan Ayta communitys approval of a US$200-million renewable energy
project in an 800-hectare area within the Aytas ancestral domain in SBFZ
An increase in Hanjins production, from 9 vessels in 2013 to 22 vessels in 2014,
with a corresponding increase of 48% in export value, from US$440 million in
2013 to US$853 million last year
Increase in Vales transhipment operations by 19%.

18

III. Tourism Strategic Business Unit

TOURISM TRAFFIC (ARRIVALS VIA SCTEX ONLY)

YEAR

VISITOR
ARRIVALS

2013

5,697,554

2014

6,398,376

TOTAL

12%

19

Meetings, Incentives, Conventions, and Exhibitions

2014 vs. 2013
MICE & Special Events
Classification

2013 2014

No. of Participants

Variance

2013

2014

Variance

13,485

26,050

93%

International

10

150%

Local

190

268

41%

113,459 219,795

94%

TOTAL

194

278

43%

126,944 245,845

94%

20

Sports Events and Participants Count

2014 vs. 2013
Sports Events

No. of Participants

Classification

2013

2014

Variance

International

18

17

Local

37

TOTAL

55

2013

2014

(6%)

12,485

21,870

75%

59

59%

30,730

21,830

(29%)

76

38%

43,215 43,700

Variance

1%

21

Completed Leisure Projects in 2014

Freeport Elite Resort, Inc.
Completed 80-room
December 2014

condotel

facility

in

opened

in

Actual Investment: PHP208 million

Mansion Garden Hotel

New 450-pax function

room

December 2014
2nd hotel facility to open in April 2015

Subic Grand Harbour Hotel

New 70-room hotel opened in December 2014
Actual Investment: PHP95 million

22

Completed &/or expanded Leisure Projects in 2014

Sun Plaza Subic
37 condotel units opened in August 2014
Actual Investment: US$3 million

Wow World
Olympic-sized swimming pool opened in May 2014
Actual

Investment, including
building: PHP46 million

new

commercial

Interpark Hotel
54-room expansion completed in 2014
Construction of commercial spaces to be complete
in 2015

Moonbay Marina Villas

15 new villas completed in 2014

23

Tourism Strategic Initiatives

1. 2014 DOT Region III Report
SUBIC IS THE NO.1 tourist destination in Central Luzon with 1.2 million
tourists followed by Clark with 621,000.

Subic enjoyed the highest hotel occupancy rate in Central Luzon at 69% vs.
the average of 62%.
2. Signing of a 3-year MOA with the prestigious Century Tuna IRONMAN 70.3,
together with the widely acclaimed Summit 5150, TRAP, and Tri-United, making
Subic the undisputed Triathlon Capital of the Philippines.
3. Subic is now also known as the Theme Park Capital of the Philippines and the
Sailing Capital of the Philippines.
4. Holding of the Advertising Summit, the most prestigious MICE event.

24

Good Governance Initiatives

Improved Peace & Order
2007 2014 COMPARATIVE CRIME VOLUME
350
295

300
250

195

200
150

128

116

106

100
50

47

38

2012

2013

31

0
2007

2008

2009

2010

2011

2014

25

Improved Security
Delivery and deployment of 8 brand new service vehicles to the Law
Enforcement Department (LED) to augment security efforts in the Freeport
Recognition by the PNPs Anti-Illegal Drug Special Operation Task Force of

LEDs valuable and outstanding support to the seizure of PHP2.5 billion worth
of shabu in Subic, Zambales.
Substantial decrease of 75% in crime volume from 2010 to 2014
Implementation of new traffic rules and higher penalties to improve traffic
discipline

26

National Government and LGU Shares

Allocation
from 5%
Corp. Tax

2011

National

2012

2013

2014
vs
2013

2014

PHP199 M

PHP187 M

PHP211 M

PHP298 M

41%

LGUs

145 M

139 M

156 M

199 M

28%

TOTAL

344 M

326 M

367 M

497 M

36%

(3%)

(2%)

27

GOOD GOVERNANCE
Jobs, Exports, and Govt. Collections
2014 vs. 2013
KPI

2013

2014

Variance

Employment

89,584

96,958

9%

US$ 1.4 B

US$ 2.3 B

58%

BIR Cash
Collection

PHP 1.4B

PHP 1.8B

27%

BOC Cash
Collection

PHP 11.3B

PHP 15.3B

36%

Export

(FOB-US$)

28

Good Governance Initiatives

Managements efforts to upgrade employees salaries resulted in the Presidents

approval of the 10% increase retroactive to January 2013 with back wages of PHP48
million. The last salary increase of employees was 6 years ago.
Management has further budgeted in 2015 a total of PHP400 million in salary

increase under the Standard Salary Law retroactive to 2009.

SBMA gave PHP243 million in dividends to the National Govt.. SBMA ranked No. 9

among the 39 GOCCs after not having remitted dividends since 2004.
Institutionalization of Integrity Program in SBMA and signing of Integrity Pledge by

Freeport locators as a shared commitment to adhere to ethical business practices

Signing of IRR with the Pastolan Aetas and NCIP, thus paving the way for the full

implementation of the Joint Management Agreement

Holding of First Womens Summit in SBFZ to promote the welfare and development

of womenfolk
Renewal of ISO 9001 certification due to no major audit deficiencies

29

Environmental Protection
Strict implementation of Permit to Transport Effluent and Sewage
Donation from the proceeds of the Chairmans golf tournament of 2 military jeeps
now used for forest patrols to eradicate illegal logging and kaingin practices
Launch of Ecology Dept.s Guard My Nest sea turtle conservation program for
stakeholders to make their establishments more pawikan-friendly
Increase in the following environmental protection efforts:
17% in the number of trees planted in the Freeport;
250% in the number of biodiversity inspections/monitoring activities of the MultiTripartite Monitoring Team; and

120% in the Ecology Dept.s Terrestial Conservation Monitoring activities

Holding of First Water Summit
Participation of SBMA in the International Coastal Clean-up activity

30

Other Accomplishments
Hosting of the International Network of affiliated Ports (INAP)s 16th General
Assembly and Symposium, focusing on mutual opportunities and cooperation in
light of the ASEAN Integration
Elevation of the SBMA Rescue Team to the Hall of Fame of Gawad Kalasag
Best Government Emergency Response Team
Increase of 22% in the Freeports active manpower employed in the shipbuilding

and other marine-related services sector, 16%

helpers/caretakers sector, and 14% in the services sector

in

the

domestic

Improved environment and beautification of the Freeport through continuous

implementation of Operation Facelift.

31

Financial Performance
2014: A Third Record Year

Millions

SBMA GROSS REVENUES

2014 is HIGHEST ever.
2,600.00
2,442

2,100.00

2,020

1,600.00
1,410

1,400

1,670

1,600

1,560 1,540

1,500

1,570

1,420 1,400

1,340

1,310

1,630

1,570
1,470

21%

1,180
1,100.00
800
610
600.00
420
200
100.00
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(400.00)

33

SBMA GROSS REVENUES

2011-2014

Millions

Existing Revenues

New Revenue/Cost Recovery Initiatives

3,000

2,441.61
2,500
2,019.96

846.67
(35%)

2,000
1,627.38
1,398.77
1,500

544.90
(27%)

184.02
(11%)

0.00
(0%)

1,000
1,398.77
(100%)

1,443.35
(89%)

1,475.06
(73%)

2011

2012

2013

1,594.94
(65%)

500

2014

34

SBMA OPERATING INCOME (EBITDA)

2014 is HIGHEST ever.

Millions

1500
1391

1250

1000

920

51%

869
779

750

795

750
653
589

627

550

500

435
338

361

475
406
359

341

367

329

240

250

183
39

0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization

S

35

SBMA NET INCOME

2014 is HIGHEST ever.

Millions

3000
2500
2000
1,556
1500
1,110
1000

40%

800

500

245
2

135 170

33

0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
-102 -233
-417
-185 -73 -35 -82
-138
-106

-500
-1000

-928
-1,203

-1500

-1,119

-2000
-2500
-2,540
-3000

36

BENCHMARKING

SBMA is the largest and most progressive Freeport

PHILIPPINE ECOZONES & FREEPORTS

Particulars

SBMA

PEZA

CDC

CEZA

AFAB

PPMC

TOTAL ASSETS

28,089,039,000

5,971,132,000

5,722,137,240

TOTAL
LIABILITIES

11,114,149,000

1,718,146,000

2,228,207,702

287,658,000

524,169,802

36,422,074

TOTAL EQUITY

16,974,890,000

4,252,986,000

3,493,929,538

5,188,225,000

978,774,109

60,771,144

REVENUES

2,954,140,000

7,979,394,000

1,303,999,000

492,963,000

823,966,671

66,259,000

EXPENSES

1,788,292,000

6,501,079,000

947,032,677

209,862,000

816,436,539

69,215,000

NET INCOME
(LOSS)

1,110,450,000

1,036,920,000

331,736,917

200,338,000

7,530,133

(4,278,035)

5,475,883,000 1,502,943,911

97,193,218

Source: COMMISSION ON AUDIT

38

2014 Approved Investments

(In PHP Million)
18,440.1

13,040.9
2013
2014

3,582.8

3,392.5
1,153.4

619.0

39

SBMA Prospects
2015 and Beyond

Projected Economic Growth

PHL is expected to register the 3rd highest GDP growth rate in the world!
Projected Change in REAL GDP in 2015
Country

GDP

China

7.1%

India

6.4%

PHILIPPINES

6.2%

USA

3.1%

UK

2.7%

Canada

2.4%

Japan

0.8%

Source: WORLD ECONOMIC OUTLOOK, Oct. 2014

41

What We Face in 2015

THREATS
Looming power shortage in Luzon and Visayas this summer due to inadequate
power capacity and high power demand during summer

Effect of Fiscal Incentives Rationalization bill on non-PEZA enterprises located

inside economic zones and free ports
National Governments study to build a mega port outside Metro Manila in
anticipation of container volume build-up in 5-8 years
Political activities in anticipation of 2016 National and Local Elections
PHLs 101st ranking out of 144 countries in terms of port infrastructure, which is
the lowest among the ASEAN-6 (Source: 2014 WEF Global Competitiveness Index )

42

What We Face in 2015

OPPORTUNITIES
SBFZs role in ASEAN Integration as an extension of the Port of Manila, transshipment
hub, logistics center, manufacturing base, and cruise destination

Congestion in the Ports of Manila, Batangas, and Cebu

Major PPP projects by the National Government in the offing, like the Tarlac-PangasinanLa Union Toll Expressway and the NLEX-SLEX Link Connector, both of which will improve
the Freeports accessibility
Integrated and simplified NLEX-SCTEX toll payment system to be completed before end2015
Inclusion of Subic with the ports of Davao, Bohol, Boracay, Cebu, Metro Manila, Puerto
Princesa, and Zamboanga in PPA-DOTs list of eight (8) ports billed as the countrys top
international hubs for cruise liners

43

2015 Strategic Initiatives

Strategic Directions
Move from over-regulation to developmental mode

Expand Freeport area to accommodate more investors

Capitalize on Philippines economic boom by aggressive marketing of

the Freeport to attract more investments

Focus on game-changing projects
Institutionalize good governance initiatives

44

I. Maritime/Logistics Strategic Initiatives

1.

Aggressively promote the Freeport Container Terminal to increase

capacity utilization, targeting at least 120,000 TEUs or 20% utilization

2.

Expand Tipo Road to ease expected traffic congestion

3.

Initiate feasibility study on expansion of container port to 1.2 million

TEUs, as well as new bypass road to connect directly to SCTEX

4.

Hold 2nd Maritime Summit in April 24 to convince more Central Luzon

shippers to use Subic Bay

5.

Support Hanjin, as well as the other boat builders, to further expand

their operations and employment

6.

Support VALE, as well as other logistics hub enterprises, to expand

operations

45

II. Industrial and Commercial Leases Strategic Initiatives

1.

Initiate the development of additional industrial parks, totaling at least

500 hectares, to accommodate new investors in cooperation with
LGUs with suitable areas

2.

Attract big BPOs to locate in the Freeport, targeting at least 15,000 call
center agents in the next 3 years

3.

Promote the Freeport among residential developers for additional

housing

4.

Bring in high value added and high technology industrial firms

46

III. Tourism Strategic Initiatives

1.

Aggressively market the Freeport to increase MICE and sports events

2.

Launch a branding and promotional campaign to project tourism

potential of the Freeport

3.

Participate in important trade fairs to generate interest in the Freeports

tourism programs

4.

Renovate SBECC and other tourist facilities

5.

Continue promoting the Freeport as the Theme Park, Triathlon,

Sailing, and Sports Capital of the Philippines.

47

Ongoing Leisure Projects for completion in 2015

Edgewater Intl. Trade & Development Corp.
32-room hotel
Committed Investment: PHP20 million

Subic Bay Peninsular Hotel

Total of 90 hotel and function rooms

Vascos Hotel and Restaurant

Expansion from 14 to 22 hotel rooms

Grand Pillar International

Four-storey building with swimming pool and elevator
Est. Total Project Cost: PHP240 million

Sands of Triboa Resort

Phase 1: 110 world-class hotels and resort rooms
Total Projected Investment, including residential development
project for completion in 2019: PHP659 million
S

48

Good Governance Strategic Initiatives

1.

Make business environment more friendly and convenient for locators

with new CRTE process

2.

Further improve employees salaries by securing DBM/OP approval of

SSL in 2015

3.

Formulate new organizational set-up for better focus and efficiency of

operations

4.

Continue crusade against corruption by getting all stakeholders to sign

Integrity Pledge

5.

Continue to improve peace and order in the Freeport by further

reducing crime rates and protecting our forests and waters.

6.

Invest PHP800 million CAPEX to upgrade long neglected equipment

and infrastructure

49

2015 CAPEX PROGRAMS

1 ROAD AND BRIDGES PROJECT
NSD Road Network
Detailed Engineering of Magsaysay Bridge
Rehabilitation of Aparri Road
44 sets of unified directional signages
2 PORTS IMPROVEMENT
Enhancement of Off-shore Approach Light Barette Steel Piles
Refurbishment of airfield signage and markers
Rehabilitation of rubble mound for barette light runway 07
Strengthening of Existing Seawall at GTI Area
Connection of Permanent Power Supply @ NSD New Warehouse
3 ENHANCEMENT OF SBMA OPERATIONS
Biometrics Timekeeping
ERPS
Desktop Computers and other related IT Equipment
Construction of Storage Area
Construction of Toll Booth at Tipo
4 PURCHASE OF SERVICE VEHICLES
30 units of CUV/Pick up/Passenger Van/AUV
2 units of bus/mini-bus
S

53.0
37.5
4.4
9.8
1.3
11.8
2.5
3.0
4.0
1.0
1.3
111.7
1.9
50.0
58.0
1.5
0.3
49.6
37.6
12.0
T

50

2015 CAPEX PROGRAMS

5 SECURITY AND SAFETY PROJECTS

70.4

5 units of patrol boat/rubber boat/dive boat

8.6

CCTV

60.0

Rifles and ammunitions

0.9

2 units highway patrol

0.9

6 IMPROVEMENT OF SBMA SERVICES

51.1

11 units Heavy Equipment (dump truck, dropside, compactor)

51.1

7 DISASTER READINESS (RISK REDUCTION)

62.0

I unit of Structural Fire Truck

32.0

3 unit of military/stake truck

24.0

I unit of ambulance

6.0

8 CORPORATE SOCIAL RESPONSIBILITY

12.0

Construction of two (2) Classroom HS Building and Clinic at Pastolan

12.0

9 COMPLIANCE WITH NATIONAL DEVELOPMENT PROGRAM

2.0

Gender and Development/Day Care

2.0

10 OTHERS

400.8

SBMA Corporate Center

400.8

TOTAL

836.3

51

Focus on inclusive growth over the next 5 years

INDUSTRY SECTOR
SOURCE

NO. OF
JOBS

NATURE OF JOBS

TOURISM & SERVICES

10,000

HRM, Hotel Staff, Chefs, Nutritionists,

Back Office

SHIPBUILDING

10,000

Welders, Painters, Design Engineers,

Naval Architects, Scaffolders

20,000

Call Center Agents, IT Technicians,

Design Engineers, Web Design
Specialists, Medical Transcriptionists

BPO
MANUFACTURING

5,000

Factory Workers, Technicians,

Production and Quality Supervisors

MARITIME & LOGISTICS

5,000

Warehousemen, Shipping Specialists,

and Customs Brokers

TOTAL: 50,000 JOB PROSPECTS

S

52

SBMA contribution to the National Economy

2014 vs. 2013

KPI

2013

2014

Variance

BOC

Php11.2B

Php15.3B

36%
36%

BIR

Php1.4B

Php1.8B

27%

Govt. 3%
GIE share

Php211M

Php298M

41%

LGU 2%
GIE share

Php156M

Php199M

28%

Dividends

Php243M

TOTAL

Php12.96B

Php17.84B

38%

53

THE GOOD NEWS

The good news never gets old because it just
keeps getting better for the Philippines.
(President Aquino in his roundtable discussion with CEOs and senior
officials from the US Chamber of Commerce and the US-ASEAN
Business Council in New York on September 23, 2014)

54