Strong Indicators of a Growing Philippine Economy

Philippines = 4.07% YTD Strongest performing stock market in Asia in 2011 Source: Presentation of Dr. Bernardo Villegas, Trade and Investments Talks, BOI, February 2012

GDP (Q1 2012)6.4% GNP (Q1 2012)5.8% Headline inflation (May 2012)2.9% Stable and resilient economic growth Headline Inflation Rates in the Philippines, All Items (2006 = 100)

2011 OFW remittances crossed the US$20 Billion barrier with full year record of US$20.1 Billion Jan-Feb 2012: US$3.1 Billion, 5.60% higher relative to last years US$3 Billion No expected decrease despite global slowdown due to geographically diversed sources Continuous inflow of OFW remittances

Service Exports: 2011 Service Exports hit an all-time high of US$11 Billion oAnchored on the BPO sector that directly employs 640,000 people Merchandise Exports: 2010: 34% Merchandise exports growth at US$51.4 Billion 2011: Electronics exports decreased by 23.7%, but overall decrease was only 6.9% at US$47.8 Billion Q1 2012: Electronics exports was at US$6.75 Billion, an increase of 5.55% from previous years US$6.40 Billion oQ also saw the growth of other top earners: owoodcraft & furniture (31.18%, US$506M); oapparel & clothing accessories (1.08%, US$470M); oignition wiring sets (9.51%, $324M); ometal components (12.02%, $232M); 15.3% surge in Gross International Reserves to US$76.13 Billion by March 2012 (US$10.15 billion higher than March 2011) Steady export growth despite global economic slowdown

6 22% Increase in BOI Investment Approvals in Y2011 (P369 Billion) Steady investment flows

Outstanding loans of universal and commercial banks amounted to P2.79 Trillion by end of 2011, up by 19.3% from last year As of end February 2012, non-performing loans ratio of universal and commercial banks improved to 2.34%, lower by 0.59 percentage points from past years 2.93% ratio Robust domestic financial sector coupled with credit growth

P197.8 Billion national government deficit in 2011 was 37.1% lower than last year 2012 budget puts the government on track for a reduced deficit at 2.0% of GDP by 2013 Efficient revenue collection effort

9 Improving global competitiveness rankings Improvement in Rank World Economic Forum Global Competitiveness Index (2010 – 2012) +20 (from #85 to 75 in 2011 from #75 to 65 in 2012 out of 142 countries) Fraser Institute Economic Freedom (2012) World Bank (2010) Government Effectiveness Indicator +16 (from #77 to 61, 141 countries) +1 (from #51 to 52, 207 countries) Transparency International (2011) Corruption Perceptions Index +5 (from #139 to 134, 178 countries)

Set to become the worlds 16 th largest economy, up 27 places from today One of the new emerging countries due to favorable demographics and strong economic fundamentals ~ HSBCs The World in 2050 Report 12 th largest population in the world Asias friendliest country 8 th Worlds friendliest country ~ HSBC World Explorer Survey 2011 ~ Other Notable Information

The Philippine Advantage

Rich Talent Pool Robust Infrastructure Strategic Business Location First-Class Lifestyle Attractive Investment Incentives

INCENTIVE BOI (Executive Order No. 226, as amended) PEZA (Republic Act No. 7916, as amended) CDC / SBMA (Republic Act No – Bases Conversion Devt Authority Income Tax Holiday (ITH) 4 – 6 years (max of 8 years) Exempted from all local and national taxes - value-added taxes, franchise taxes, excise and ad valorem taxes) ITH Bonus3 years provided the firm meets certain conditions Special Tax Rate of 5% on Gross Income Importation of Capital Equipment, Spare Parts and Supplies 0% duty-freeTax and Duty-Free Wharfage Dues and Export Tax, Duty, Impost and Fees ExemptedNone Simplication of Customs Procedures Available Employment of Foreign Nationals Foreign nationals may be employed in supervisory, technical or advisory positions within 5 years from a projects registration, extendible for limited periods. The positions of president, general manager, and treasurer or their equivalents, of foreign-owned registered firms may be retained by foreign nationals for a longer period. All foreign employees may bring with them their spouses and unmarried children under 21 years of age. Attractive Investment Incentives

I. Preferred Activities Regular List: Agriculture/ Agri-business and Fishery Creative Industries/Knowledge-Based Services Shipbuilding Mass Housing Iron and Steel Energy Infrastructure Research and Development Green Projects Motor Vehicles Tourism Strategic Projects Hospital /Medical Services Disaster Prevention, Mitigation and Recovery Projects II. Export Activities III. Mandatory List Production and manufacture of export products Services exports Activities in support of exporters IV. ARMM List Investment Priorities Plan 2012

Sectoral Opportunities

ENERGY - Gross Generation and Installed Capacity, 2011 (Per Type of Fuel/Energy Source) 68,279 GWh Note: Preliminary gross generation as of January 2012 Excluding off-grid generation Installed capacity as of June ,233 MW Generation Installed Capacity

LUZON - 10,450 MW VISAYAS - 2,200 MW MINDANAO - 1,950 MW Philippines: 14,400 MW Source: DOE PDP Total Required Additional Capacity ( )

Renewable Energy - Capacity Installation Targets (and FIT) Source: Department of Energy Sector Installed Capacity (MW) Total Required Additional Capacity ( ) Feed-In-Tariff (EUR / KWH) Geothermal 1,966.01, Hydro 3,400.05, Biomass Wind 33.02, Solar Ocean TOTAL5,438.09,865.3

Innate Advantage in Renewable Energy one of the largest producers (second to the US) of geothermal energy in the world a big ocean energy resource due to the countrys archipelagic nature abundant water resources that can be tapped for power generation the top wind power producer in Southeast Asia high amount of solar radiation that can be converted into useful energy abundant supply of biomass

RA 9513 Incentives – For RE Developers: 1. Income Tax Holiday (7 years) 2. Duty-free Importation of RE M/E & Materials 3. Special Realty Tax Rates on M/E 4. Net Operating Loss Carry-Over (NOLCO) 5. Corporate Tax Rate of 10% after the ITH 6. Accelerated Depreciation 7. Zero Percent Value – Added Tax Rate 8. Tax Exemption on Carbon Credits 9. Tax Credit on Domestic CE and Service Government Support

major producer of tropical fruits such as banana, pineapple and mango Agriculture/Agribusiness and Fishery leading producer and exporter of seaweeds worlds eight largest fish producer market leader in canned pineapple and juice market

Palm Oil (one of five countries in Asia with palm oil plantations) 1st in global share of coconut production abundant supply of mango fruit seed (mango seed oil - ingredients for cosmetics) viable location for rubber plantation & processing Agriculture/Agribusiness

Tourism 2010 visitor arrivals reach all time high at 3.52 M Top 3 Markets Korea USA Japan Top 5 Destinations Jan-Apr 2011 growth rate: 13% CEBUCAMSURBORACAYDAVAOCAGAYAN VALLEY

Retirement villages Retirement villages Medical tourism Medical tourism Healthcare & wellness products & services Healthcare & wellness products & services Tourist accommodation facilities Tourist accommodation facilities Areas for investments:

Located in the Ring of Fire Located in the Ring of Fire 5th most mineralized country in the world 5th most mineralized country in the world 2 nd in Gold 4 th in Copper 5 th in Nickel 6 th in Chromite 9 million hectares of mineralized land 9 million hectares of mineralized land Only 1.4% with mining permits so far 2.2 million sq. km. offshore mineral potential 7 billion tons of ore reserves 7 billion tons of ore reserves Large pool of professional geologists and mining engineers Large pool of professional geologists and mining engineers Presence of highly organized institutions and professional organizations Presence of highly organized institutions and professional organizations Mining

Most prolific copper and gold producers are found in the Baguio and Mankayan districts The Surigao-Davao districts also contribute much to Philippine gold production The Surigao-Davao districts also contribute much to Philippine gold production Nickel major producers are in Palawan and Surigao Nickel major producers are in Palawan and Surigao Potential areas and deposits identified by the Mines and Geosciences Bureau: Potential areas and deposits identified by the Mines and Geosciences Bureau: - Zambales – Cr, Ni, Co, Pt, Cu, Au - Samar-Eastern Mindanao – Au, Cu, Fe, Cr, Ni, Pt, Mn - Palawan – Cr, Ni, Co, Pt, Au Ideal Locations

Back-office and KPO: Best-kept secret Animation & Game Development Engineering Design Contact Center Software Development Industry Snapshot Contact Centers in PH: 220+ Full time employees as of 2011: 416,000 Revenues in 2011:US$7.4B Revenue Growth Y-o-Y: 21% IT & BPO No. of service providers: 100+ Full time employees as of 2011: 128,650 Revenue in 2011: US$2.05B Revenue growth Y-o-Y: 24% No. of development companies: 135 (export only) Total professionals employed: 49,908 Revenue in 2011: US$993M, 37% growth Y-o-Y 20yr wealth of experience in the field of Animation Capabilities in 2D, 3D, Maya, 3DMax, Medical/Educ. Graphics & Animation Revenue in 2011: Animation at US$128M, Game Devt at US$8M Over 75,000 licensed professionals 40,000 graduate of engineering courses annually (CAD-enabled) Revenue in 2011:US$172M

Why the Philippines is a Top Offshore BPO Location 3 rd -largest English-speaking country, 12 th most populous country 90+ million population, 39+ million work force 470,000+ college graduates per year; 93% literacy rate Western-based legal and accounting curriculum and certification Scalable Educated Talent Pool Labor costs for English-speaking professionals among lowest in the world All-in costs among lowest in the world Predictable and manageable inflation Cost Competiveness Abundant low-cost & high quality real estate in several urban areas Reliable, redundant, low-cost telco infrastructure Reliable power and building % back-up as a standard Available 24/7 low cost transportation Excellent Infrastructure Government support in education, locator support (PEZA, ICTO) Income tax holiday (4-8 years), 5% tax on GI post holiday, VAT exemption Comprehensive BPAP Road Map 2016 to achieve 20% YOY growth Government Support & Public-Private Partnership No. 1 in Voice: customer care, tech, financial services, sales, collections Mature/growing industry-specific and cross-industry capability: IT, F&A, HR, Health & Care BPO, Procurement, Banking, Utilities, Telco Primary English-based services plus other Asian and European languages Analytics & KPO capabilites Proven Track Record 29

Driver for export growth Driver for export growth Home to seven of the worlds top 30 chipmakers and three of the largest HDD producers Home to seven of the worlds top 30 chipmakers and three of the largest HDD producers Supplies the world with 2.5 million HDDs per month Supplies the world with 2.5 million HDDs per month Accounts for 10% of the SMS world supply Accounts for 10% of the SMS world supply Electronics

Integrated Industry-Government Strategy for Market Growth Integrated Industry-Government Strategy for Market Growth Shift from its present electronics products portfolio to Electronics Manufacturing Services (EMS) and later to other segments of the electronics value chain which offers spillover/linkages opportunities Shift from its present electronics products portfolio to Electronics Manufacturing Services (EMS) and later to other segments of the electronics value chain which offers spillover/linkages opportunities Investment promotion for Solar Power, Aerospace, Automotive, Medical and Military companies Investment promotion for Solar Power, Aerospace, Automotive, Medical and Military companies Supply Chain Development Supply Chain Development Supplier Development/Matching (for robust supplier base) Supplier Development/Matching (for robust supplier base) Market Opportunities

Infrastructure The country only spent less than 2% of GDP on infrastructure in recent years; target 5% of GDPThe country only spent less than 2% of GDP on infrastructure in recent years; target 5% of GDP Building infrastructure consequently a cornerstone of the Aquino administrationBuilding infrastructure consequently a cornerstone of the Aquino administration Given the large financial requirements, the government pushes PUBLIC PRIVATE PARTNERSHIPGiven the large financial requirements, the government pushes PUBLIC PRIVATE PARTNERSHIP Since 2011, 2 infrastructure projects bidded outSince 2011, 2 infrastructure projects bidded out 8 in the pipeline. More to follow8 in the pipeline. More to follow

Infrastructure The PPP product is still being perfectedThe PPP product is still being perfected Projects are in transport (rail and road), power (LNG, coal, natural gas and renewable energy), airports, seaports, water...Projects are in transport (rail and road), power (LNG, coal, natural gas and renewable energy), airports, seaports, water... Our contact at the PPP Center:Our contact at the PPP Center: Ferdinand D. Tolentino Deputy Executive Director