Philippines Shipping Report Q1 2012 - new market research report published

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2012-02-03 16:59:59 - Philippines Shipping Report Q1 2012 - a new market research report on companiesandmarkets.com

For 2012, the Port of Cebu has positioned itself as the trailblazer as far as Philippines ports sector is concerned, with highly impressive year-on-year (y-o-y) tonnage throughput growth of 24.43% forecast. This increase would see the Port of Cebu retain its place as the country´s number one port in terms of tonnage throughput, ahead of the Manila International Container Terminal

 

 

(MICT), which we predict will enjoy healthy y-o-y growth of 7.40% in 2012.

We believe that the Philippines is set for strong, healthy economic growth over the long-term, and could be one of the best-performing markets in Asia over the coming decade. A low overall loan-todeposit ratio of 62%, a high Tier 1 capital ratio of 14.2%, and moderating non-performing loans, combined with the country´s positive demographics story, all point to healthy growth potential. Over the long term, we also see strong potential in the Philippines´ demographics. With the archipelago set to add almost 14mn to its population by the end of the decade, and per capita GDP to more than double, vast opportunity lies in the shipping sector.

Several Asian states, including the Philippines, have until now successfully balanced strong trade ties with China and security pacts with the US. The question is whether this will continue to be the case, or whether these countries will eventually have to align their security policies with China.

For the foreseeable future, we believe that Asia´s major states will not have to make such a decision. Neither China nor the US is exerting pressure on countries to choose sides for the time being. Should this change then the Philippines could find itself between a rock and a hard place.

Headline Industry Data

- 2012 tonnage throughput at MICT forecast to grow 7.40% to 20.08mn tonnes.
- 2012 tonnage throughput at the Port of Cebu forecast to increase 24.43% to 34.27mn tonnes.
- 2012 tonnage throughput at the Port of Davao forecast to rise by 5.82% to 11.46mn tonnes.
- The real value of the Philippines´ total trade will rise by 5.0% this year, with exports totalling US$64.47bn, ahead of imports at US$63.48bn.

Key Industry Trends

Bataan Freeport Highlights Desperate Need For Port Capacity

The major investment we believe is required in the country´s ports sector is beginning to become a reality, with the news in September 2011 that the Authority of Freeport Area of Bataan (AFAB), a government body managing a special economic zone (SEZ) in Bataan, is to develop a seaport near the SEZ.

ICTSI Enhances Terminal Automation At MICT And SCT

International Container Terminal Services (ICTSI) announced towards the end of 2011 that it is enhancing the automation levels at two major port terminals: Manila International Container Terminal (MICT) in the Philippines and Suape Container Terminal (SCT) in Recife, Brazil. The operator is rolling out a radio frequency identification (RFID)-based truck tracking system for the MICT with the help of Identec.

US Chips In For Radiation Technology

The Port of Manila strengthened its security measures with the introduction of new radiation detection technology in October 2011. A contribution of US$26mn was provided by the US government for the new technology, under the Megaports initiative.

Key Risks To Outlook

According to the World Economic Forum´s latest Global Competitiveness Index, which ranks each country´s infrastructure, the Philippines performs abjectly, propping up the Asia region in 13th (and last) place and ranking 123rd in global terms. This outlines the urgent need for the government to invest in the country´s infrastructure if it is to compete not on only on a global stage but on a regional one too.

In macroeconomic terms, although Philippine banks are well-prepared to weather further weakness in the global economy, growth could suffer if the EU and US fall back into recession, with the threat of a hard landing in China also looming. This could have a detrimental effect on the Philippine shipping sector. The Philippines remains vulnerable to the threat of large-scale capital flight in the event of a particularly acute global credit event, but the health of the country´s banks is not in question.

BSP policy will also be an important factor in the banks´ ability to continue to pursue strong loan growth, with downside risk in the event that the BSP eschews rate cuts for an extended period of time in the face of stubborn inflation.

Further downside risk is presented by the Supreme Court ruling from July 2011 that has redefined the concept of foreign ownership in Philippine public utilities, resulting in a surge of non-compliance among these firms. We believe the ruling, which restricts the definition of foreign investor ownership in public utilities, will undermine President Benigno Aquino III´s strategy of attracting more foreign direct investment (FDI) over the long run.

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