THE private sector remains bullish on the Philippines as an investment hub in the region, given its strong macrofundamentals and the political will of the new leadership to implement drastic changes in the country.
Asia CEO Awards Chairman Richard Mills said the Philippines has the fastest-growing economy in the world, and is earning the confidence of investors that it is the center of growth in Southeast Asia.
“We feel the Philippines is the whole region’s focus of investment,” he said at the media launch of the Asia CEO Awards 2016 at the Marriott Hotel in Pasay City on Friday.
Mills, also the chairman of Chalre Associates, said the Philippines continues to be the preferred trade destination in the region by foreign investors.
“If you look at the other places, Singapore and Hong Kong are wonderful places, but they are the most expensive in the world to do business. They’re aging societies; they have small geographies and small populations,” he told the BusinessMirror.
“The opportunities now are in places where most people are and centralized locations, like the Philippines. It’s right in the geographical center, has a very young and dynamic population, and now the fastest-growing economy in Southeast Asia. Plus, you’ve got a very popular President who has done things like we’ve never seen before. You’ve got great stories from many companies and people from different countries. So these make a lot of sense,” he said.
These attributes of the country have lured regional companies to move parts of their regional operations and even global businesses to the Philippines, the top executive said.
“It’s only a matter of time before the most senior ranks of the ladder also get to move here. That is what we see in the future,” he noted.
Mills allayed concerns on recent reports that some foreign investors in the country are pulling out their money from the local bourse and even potential investors are either shying away from doing business here or still in the “wait-and-see” attitude. Concerns reportedly include extrajudicial killings, peace-and-order problem brought about by the Davao bombing incident and the derogatory remarks hurled by President Duterte against the United Nations, the United States and the European Union.
Based on data from the Philippine Stocks Exchange (PSE), around P25 billion has been already pulled out from the stock market in 22 days, or over P1 billion per day. The PSE index fell by 0.5 percent, or 38.75 points, to 7,723.60 at the close of trading on Friday.
As per the Bloomberg report, this is the longest exit of foreign funds from the country since the 2007 financial crisis.
“I think those are just in the minority. The majority of companies here are still happy as they are growing in the Philippines. The most important thing is the people here, who are nice, hardworking and have positive attitude toward their work. And this is what’s most important to running your business. Definitely, we’re here to continue with our business,” he said.
Meanwhile, ADEC Innovations CEO James M. Donovan said the stock market is just a short-term investment that when investors divest from it, the divestment does not create a big impact on the nation’s investment reputation.
“It’s not a true measurement of the investability of the country. The long-term foreign direct investment—or the long-term money—is absolutely still on track to continue to invest in the Philippines. And those long-term dollars, yen or euros are really what the country needs to seek. The ups and downs of the stock market happen all over the globe for various reasons: [business] sentiments, interest rates and many different things,” he said.
The challenges the country needs to address, he said, are its infrastructure and capability enhancement to deliver public-private partnerships (PPPs) in an efficient timely manner.
“We have the numbers, positive investment [climate] and the capability of long-term future for the Philippines. They are absolutely on track and the investments are there to back it up,” Donovan said.
Another area the country needs to work on, cited Synchrony Global CEO Darcy Mark Lalonde, is tourism, which remains to be “very underutilized.”
“The people are great, whose service orientation and English communication are commendable. The culture, the history and the beaches are wonderful. Unfortunately, tourism is still underutilized. So I still believe again with the strong governance [and] some regulatory overlay that our tourism will improve. And that’s why I see that the current government is bringing those things to the forefront,” he said.
Commenting on the “colorful, mercurial and impulsive style” of President Duterte, which is “introducing a lot of uncertainty” to investors’ perception of the country, Dr. Bernard Villegas, an economist, author and professor at the University of Asia and the Pacific, said this will not cast a shadow over the “certainty” of things where the country’s economic growth is concerned.
He said the foul remarks of the Chief Executive to some international personalities are just expletives and that he really did not mean to insult them.
“All those reports that he’s insulting others are wrong. I’m not in any way excusing him for his bad manners. He’s giving a very bad example to young people. He has to control his language. But to be fair, he has not insulted any top personality. It’s just an expletive that he uses, especially in Cebuano,” he said.
But whatever Mr. Duterte says in the future, Villegas is certain of the $28 billion to $30 billion worth of remittances coming to the Philippines year in and year out.
“I’ve researched this for the last 10 years that whatever happens to the rest of the world, we will have a 3-percent to 5-percent increase year in and year out in remittances. Our more than 10 million workers [abroad] will still continue to remit,” he said.
He also noted the business-process outsourcing (BPO) industry will reach $22 billion to $25 billion in terms of revenue, increasing by 15 percent to 18 percent no matter what the situation worldwide is.
“What we’ve heard is that we are building more and more office buildings for the thousands of people being employed by BPOs. Then all of these income that are coming are stimulating to multiplier effects, such that we see 40 million Filipinos as domestic tourists,” he said. “All these are certainties. They will not change whatever happens to the President.”
Villegas, though, suggested, Duterte needs to tone down a bit in the way he speaks, especially if it concerns the nation as a whole.
He is positive that if the President controls his impulsiveness and implements his economic agenda well, the country’s gross national product rate could even surpass its target.
“If he can, little by little, change his impulsiveness, then we can count on his decisiveness in putting up infrastructure, and next year if they’re able to implement those 15 to 17 PPPs that have been already announced by his Cabinet, then our growth rate by next year will be eight percent. If not, it will only be six percent to seven percent, which is still the highest growing economy in Asia,” he said.
Image credits: AP/Bullit Marquez