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Subic Bay Metropolitan Authority (MPD-SBMA)

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04 February 2013

SBMA Targets $800-M 2013 Investments

Subic Bay Metropolitan Authority (SBMA) expects $800 million in investments this year, a strong turnaround from an estimated $200 million in 2012, with two new shipbuilding facilities to be established by EU firms and major tourism projects.

SBMA chairman and administrator Roberto V. Garcia said this year would be a turnaround year from the poor investments performance last year.

"We expect $800 million in new investments this year because more investors are coming in. Last year was poor because all we have were mostly inquiries from foreign investors," Garcia said at the sidelines of the Philippine Port and Shipping Conference.

SBMA has no official report yet on the investments inflow in 2012, but Garcia estimated it at only $200 million.

Of the $800 million projected investments this year, $600 million are expected to come from the two new shipbuilding facilities which will manufacture small crafts for the exports market. The rest of the investments projection would come from the tourism and gaming projects of major hotel and casino operators.

Garcia, however, refused to identify the company but said they are European investors, which are expected to locate within the year in the freeport.

At present, Subic Freeport hosts the $2 billion shipbuilding facility of Hanjin of Korea.

While SBMA was a laggard in investments generation in 2012, Garcia earlier reported that the freeport achieved the highest profit last year in its 20-year history.

The freeport posted a record profit of P789 million in 2012. This is a drastic turnaround from the P1.2 billion loss in 2011.

Garcia said that the turnaround was due to increased revenues, reduced operating expenses and a favorable exchange rate.

The revenue increase of 16 percent versus 2011 was brought about by new major projects in seaport operations such as the Vale ore transshipment project and the start of commercial operations of the Phase 2 of the new container port.

Coupled with an aggressive collection campaign on existing accounts, new revenue streams were created through increased admission fees on importations and the imposition of fees to defray municipal expenses that were previously subsidized.

Operating expenses decreased by seven percent versus 2011, as the Agency implemented a comprehensive austerity program. Salaries similarly dropped by seven percent. as a freeze hiring policy was implemented and manpower count decreased. Repairs and maintenance likewise decreased by 46 percent and advertising was slashed by 35 percent versus 2011. As a result, earnings before interest, taxes and depreciation (EBITDA) jumped from P329 million in 2011 to P629 million - a 91 percent increase.

Due mainly to favorable exchange rates, unrealized foreign exchange posted a gain of P1.1 billion in 2012 from the previous year's FOREX loss of P566 million.

In the meantime, the SBMA's 2013 Strategic Planning session focused on developing new initiatives to sustain and improvefurther SBMA's financial position in the coming years.

New strategic initiatives concentrating on the seaport, airport, tourism, and commercial and industrial leases were formulated, targets were set and detailed plans of action were submitted and approved by the SBMA Board. (Bernie Cahiles-Magkilat, Manila Bulletin)

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