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Wal-Mart looking at Philippines push

Wal-Mart is in talks on investing in the Philippines
Wal-Mart, the world's largest retail chain, is in talks to set up business in the Philippines  

MANILA, Philippines -- Wal-Mart, the world's largest retail chain, is in negotiations to set up a regional business in the Philippines.

Following an abrupt end to the country's political and economic turmoil, Wal-Mart is in talks with the giant Aboitz Group to establish an alliance in the Philippines.

The Aboitiz group of companies, a Philippine conglomerate which has vast interests in shipping, air transport, cargo handling and utilities, confirmed on Monday that it is in negotiations with Wal-Mart.

However, the Aboitiz group refused to comment on the state of the talks, and claimed that it is merely "assisting Wal-Mart in studying the feasibility of establishing its presence in the Philippines."

The Aboitiz group said it could provide help with logistics, but that there had been no talk of equity participation between the two companies.

Wal-Mart's president for Asia-Pacific Joe Halfield likewise refused to comment on any investment plans, after meeting Philippines' Trade and Industry Secretary Manuel Roxas II.

But Roxas said the company is expected to invest in the Philippines by mid-year.

He says the US-based retailer is studying its entry strategy and has expressed intention to come back with a decision in a month's time.

In search of better business climate in Asia

Wal-Mart is in search for a site in Asia that offers a better business climate, after a failed start in Indonesia.

At present, Wal-Mart buys $60 million worth of Filipino goods annually for sale in its branches all over the world. It expects to increase purchase of local goods upon its entry in the country.

Wal-Mart is United States' biggest employer and has net sales of more than $120 billion a year. The company registered total sales of $190 billion in 2000, and expects to post sales of $200 billion this year.

Business options

But aside from setting up retail stores, Wal-Mart has a number of options in the Philippines. These include putting up a regional operating headquarter, a wholesale/distribution center, and an agricultural processing plant.

Roxas added Wal-Mart is keen to win investment incentives from the government on taxes, visa requirements, exports and other issues.

A retail liberalization law passed last year, which lifted a 46-year ban on foreign companies entering the local retail market, sparked renewed international interest in the Philippines.

However, slow progress in implementing the law, and unfavorable political and economic conditions discouraged companies to make any investment.

But Roxas vowed to lure back foreign retail companies that earlier signified interest to come into the country under the new administration.

More giant retailers being pursued

Roxas said the Trade and Industry department would also convince French retailers Casino Guichard Perrachon and Carrefour SA to take a second look at the Philippines.

Previously, Casino pulled out of plans to acquire Uniwide, Holdings Inc. because of political jitters when former President Joseph Estrada was still in office.

Casino intended to invest $100 million in cash-strapped Uniwide, which form part of the local retailer's rehabilitation plan.

Carrefour, on the other hand, had dropped talks with another local retail firm Rustans' Group, apparently due to the same reasons.

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