PSE Circular for Brokers No. 1537-99

June 29, 1999 PSE CIRCULAR FOR BROKERS NO. 1537-99 Megaworld to Invest P500 Million in Eastwood CyberPark Firms New holding company Megaworld Corporation is encouraging Filipino IT entrepreneurs to establish operations in its Eastwood City CyberPark via a proposed P500 million venture capital fund exclusively set aside for local IT locators in the CyberPark. The company intends to use the venture capital fund to invest in export-oriented locators with at least a five-year track record of successful operation. A good record in management and a strong product profile are also important requisites. Megaworld may take in strategic partners to build up a resource pool for the fund. aisadc Megaworld's minority stake in an IT company will reach as much as ten percent of the latter's equity capital. The expected holding period for each investment is around five years, within which time the locator will work towards public listing in the Philippine Stock Exchange. Megaworld Senior Vice President Kingson Sian said the fund is expected to catalyze the growth of more homegrown companies in growth areas within the IT industry. "Our direct investment in these IT companies will only be the tip of the iceberg," Sian noted. "More important to Megaworld is the potential export earnings, quality employment and the leading-edge technological capabilities that these firms will plow back to the economy." "The Philippine economy will stand as the biggest winner from the success of this pioneering venture over and above the developer and the IT locators themselves." he adds. LLcd He said that an immediate beneficiary of the holding company's investment in Filipino IT firms will be the country's brain trust of IT professionals which is already considered one of Asia's largest. Megaworld plans to channel 10 percent of the fund's annual profit to a trust fund for poor but deserving students studying in the Asian Center for Information Technology (ACIT), the IT graduate school to be jointly undertaken by Megaworld and the University of Asia the Pacific at the CyberPark. The venture capital fund will come on top of the incentive package recently granted to all local and foreign IT locators at the Eastwood City CyberPark by the Philippine Economic Zone Authority. The package includes an income tax holiday of up to eight years with the option, thereafter, to pay a special five percent gross income tax in lieu of all national and local taxes, tax and duty-free importation of capital equipment, additional deduction from taxable income of 50 percent the total cost of labor and management training, permanent residency status for foreign investors and immediate family members and the employment of foreign nationals.