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THE Philippines has been ranked among the strongest clusters of emerging markets in Southeast Asia, thanks to business-friendly conditions and core strengths, according to a logistics survey of 50 nations globally.
Overall, the Philippines got the No. 20 slot, with a score of 4.96, in the Agility Emerging Markets Logistics Index 2019 of Transport Intelligence (Ti), one of the world’s leading providers of expert research and analysis dedicated to the international logistics sector. It joins the roster of its peers, such as Indonesia (No. 4), Malaysia (No. 5), Vietnam (No. 10), and Thailand (No. 11).
Based on three key areas for logistics market development the study examined, the Philippines is ranked 15th, with a score of 5.03 in Domestic Logistics Opportunities; 14th, 5.15 points, International Logistics Opportunities; and 34th, 4.40 points, Business Fundamentals. Though the country makes it to the first half for both local and global logistics opportunities, it trails behind its neighbors to belong to the second half for business fundamentals sub-index, mainly due to the failure of the legislative and judiciary system to ensure protection of investments and contracts.
Emerging markets’ trade volume growth has slowed down over the last couple of years, per the study. From January to September 2018, monthly and year-on-year (YoY) increase has averaged 6.2 percent for imports and 3.3 percent for exports. The corresponding means for 2017 were 7.2 percent and 4.3 percent, respectively.
Region-wise, trade expansion has been robust in emerging Asia, with average import volume growth of 7.4 percent and export volume growth of 4.8 percent. Looking at the trade section that gauges the volume of goods delivered by air and sea between the emerging markets included in the Index and the United States or European Union (EU), Southeast Asian nations show a notable strength.
The Philippines has the fastest growing trade lane, registering the highest air freight volume to the US at 29,908 tons in 2018, or 59.5 percent higher than the recorded 18,748 tons in 2017. It is the 23rd, on the other hand, in terms of delivering goods to the EU, which grew by 5.3 percent from 21,368 tons to 22,500 tonnes YoY.
By sea, the country is the 13th top shipper of items to the EU at 1.9 million tons, or 17.7 percent higher than 1.6 million tons a couple of years ago. Shipping 6.9 million tons of goods in 2018, it has the 22nd fastest trade lanes to the US. This represents a hike of 10.1 percent, from 6.2 million tons in 2017.
External factor weighs in the survey respondents’ perspective toward the performance of the entire Southeast Asian region. The ongoing trade tensions between the US and China, for instance, have an impact on them.
It is noted that the latter leads again the Index for the ninth consecutive year. In this year’s edition, China is graded first overall and tops both the domestic and international logistics opportunities sub-indices.
Considering the role of most of the 10 member-states of Asean in feeding the Chinese supply chains while competing with manufacturers in China, the question on whether there is a trade war coming between the world’s most populous country and the superpower matters a lot.
In fact, 56.1 percent of the participants asked believe that the Asean markets stand to benefit from the pressure that started early last year when both economic giants imposed punitive tariffs on goods exchanged with one another.
While the Philippines—one of the closest allies of the US in the region and newfound friend China—is seen affected by the issue, the 500 logistics industry professionals surveyed still agreed that the it is the 20th nation with the potential to grow as logistics markets in the next five years.
Ti conducted the study, from October to December 2018, to gather the respondents’ opinions on prospects and setbacks confronting the emerging markets in the years ahead.
“This year’s Index highlights the range of challenges and opportunities many markets face. The uncertainty which surrounds trading relationships, combined with implementation of new trade barriers, threatens to derail integration of emerging markets with the rest of the world. It is essential that obstructive trade policy does not stand in the way of commercial opportunities which help drive growth in emerging markets.” Ti Chief Executive John Manners-Bell said.