Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
The outlook for the Philippines economy is rosy, despite an impending change at the top at the end of June, when a new president will take over the reins as outgoing President Benigno S. Aquino III’s six-year term comes to an end.
However, more needs to be done to improve infrastructure, the supply chain, middle management, banking for foreign companies and to create a level playing field for foreign companies having to compete with family-run conglomerates. A softening of strained relations with China and negotiating an FTA with Europe would also help the economy become even more competitive.
These were the views of a panel of experts who participated in a high-level conference about the outlook for the Philippines economy at Asia House titled: ‘The Philippines: Keeping up the momentum.’
Speaking at the Asia House conference after a keynote speech by Philippine Finance Secretary Cesar V. Purisima, Roberto B. Tan, Treasurer of the Philippines, Bureau of Treasury, said: “I am confident that whoever wins the elections will continue with the reforms programme of the current president and if they have the political capital they could even do a lot more than what needs to be done.”
When probed by a member of the audience about the calibre of the various presidential candidates, Mr Tan said some of the candidates were on the “weaker side but they have a core of advisors from the professional sector who are all known personalities.” “There will be support for things that are going well so it’s just a matter of expanding them,” he added.
He also said the next administration faced big challenges in “tax jurisdiction” – such as expanding the tax base and making it more competitive for the corporate sector. When it comes to the question of whether any new president could potentially reverse the reforms implemented by Aquino that had given the country the highest GDP growth rate in decades, he said he was certain this would not happen and there would be a continuation of the existing reforms programme.
Echoing what the Philippine Finance Secretary Cesar V. Purisima said in his speech, he said: “The difference will just be the style of management and how effective the President is moving things forward.”
He continued: “SMEs are a focus of the Government in terms of how they can contribute to nation building. We are doing much to encourage the financial inclusion of SMEs,” he said, adding the economy was strong in the services sector but he wanted to move it into IT services as well.
A delegate asks a question at the conference ‘The Philippines: Keeping up the momentum.’ Credit: George Torode
As for the Philippines’ strained relationship with China, he said “We do have difficulties with China on the geopolitical side. But we don’t want that to be the centre of our relationship. We have to concentrate on our economic relationship with China. The China market is growing bigger and it’s probably going to dominate our trade relations. We need a softening of issues with China and we are focused on doing that,” he added.
Lynette Ortiz, Head of Capital Markets, ASEAN, Standard Chartered Bank, was also very optimistic about the country’s economic outlook.
“The Philippines stands out as an emerging market economy with well-documented growth above its peers and a strong banking system. The capital of the banks is well above the Basel III requirements – at 16 per cent. The investor base is very much focused on these disciplines.
“Fiscal and monetary policy assumptions are good. That’s why investors like it. They have a clear and disciplined programme of accessing financing and that has built up support.
“It’s a consumption-driven economy, capital formation is growing and a lot needs to be done in infrastructure so there are lots of opportunities,” she said.
Tony Best, Group Director, STI Surface Technology International, a leading UK electronics company, that employs nearly 500 staff in Cebu, said he was very happy with the country, though he admitted “it’s not perfect.”
“Infrastructure problems are not specific to the Philippines but the whole region,” he said. “The traffic lights and roads in Manila need to be done – not just the big stuff,” he added. He said the fact that English was widely spoken was a major plus. “The Philippines Government is supportive and the export zone works well. We have had a lot of support from UKTI,” he added.
“There has been a lot of talk from the minister about ASEAN,” he said referring to the keynote speech by Cesar V. Purisima, “but you need to differentiate yourself from ASEAN to compete for jobs,” he explained.
He also said tourism could be improved as the country was relatively unknown to British holidaymakers.
Gilberto G.B. Asuque, Chargé d’Affaires a.i., Embassy of the Republic of the Philippines, gave the closing remarks. Credit: George Torode
“The supply chain is weak so we have to outsource to China, so there are lots of opportunities to deepen the supply chain too,” Mr Best said.
He said one of the big minuses operating in the country was that “banking was less easy as a foreign player. It’s not easy to get support for SMEs.”
And he said middle management needed improvement too, explaining it was hard to find managers that could “target growth and aggressively manage growth.”
He also said that domestic large conglomerates made it difficult for foreign companies to invest in the Philippines. “If the playing field was changed, they would be forced to go overseas and you would have a world-class economy,” he said.
Richard Graham MP, Trade Envoy for the Philippines, Malaysia, Indonesia and the ASEAN Economic Community (AEC), was very upbeat about two-way trade and investment between the UK and Philippines.
“What I am seeing in the Philippines is a relative explosion of high quality consumer goods,” he said. He pointed out that 30 years ago there was not the array of goods from the UK in the Philippines that there is now, citing Lotus Cars and Aston Martin. “What’s changed is the growth of the middles classes and the economy and British businesses have benefited from that,” he said.
British exports to the Philippoines are up 38 per cent, he added.
“If I was in the Philippines Government I would like to see what British insurers can contribute. There are some real opportunities in high tech sectors such as aerospace and FinTech,” he added.
He pointed out the NHS would probably not survive “an immigration ban on Filipino staff” and that Philippine companies were also investing in the UK.
In 2014 Philippines firm Emperador bought Whyte & Mackay whisky, for example, he said.
But Vietnam’s FTA with the EU had “outpaced the rest of ASEAN”.
“There is a catch-up process for the Philippines and other countries,” Mr Graham said. “The quicker they can go towards that it will be a competitive advantage.”
To see a slideshow of the conference ‘The Philippines: keeping up the momentum’ and the private briefing with Cesar V. Purisima click below:-
naomi.canton@asiahouse.co.uk
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